Good morning, ladies and gentlemen. Please welcome Adam David, Vice President, Investor Relations, Pitney Bowes.
Well, good morning, everyone. Thank you so much for coming. Before we get started, I just wanted to spend a second on the day. Marc is going to lead us off. We'll have our business unit presidents come up and speak about their respective areas. Jason Dies will talk about SMB, Christopher Johnson, Financial Services, Bob Guidotti, Software, and Lila Snyder, Commerce Services. We'll take a short break. Stan will come up and take everyone through the financials, and we'll open it up for Q&A. We've also included disclosures in this presentation around forward-looking statements and the use of non-GAAP measures. I'd ask that you read through that at your convenience. With that, let's get started. I'm pleased to introduce our President and CEO, Marc Lautenbach.
Thank you.
Yep.
Good morning. Let me add my thanks to Adam's for your participation this morning. This is an important opportunity for us to refresh our message. We think we've got a lot of exciting things to talk about. We're particularly anxious to learn from your questions and your comments. I'm going to have a slightly different cast to my comments than typical. Yesterday, Wachtell Lipton put out what was a interesting piece. The gist of the piece was around corporations' focus on the long term. Subordinate to that thought is how is it that corporations thought about stakeholder management. This piece was in reaction to something that the SEC Chairman Clayton put out last week on long-term focus of corporations. I'm going to ask Adam to put the piece from Chairman Clayton on our IR site, because I think it's important.
It's important in the following sense. It is in large part, how it is we think about running the corporation. Chairman Clayton as well as Wachtell Lipton, join a chorus of investors. The retail side, in particular, goes a little bit more silent. The index funds, in particular, have more and more spoken about the importance of a long-term view of how corporations manage their businesses, and we agree. Four weeks ago, Pitney Bowes celebrated our 99th anniversary. Said another way, Pitney Bowes began its 100th year of business, and that puts us in a very short list of companies that have enjoyed that kind of tenure. Pitney Bowes, by definition, has been a corporation that's been focused on the long term, not just over the last couple of years, but for the last 100 years.
The point that I would make about our focus on the long term is this isn't a story of what's going to happen in the next five or six years. This is a story that you're going to hear about this morning of what's happening right now. The evidence of the success and the efficacy of our investments is found in the revenue growth, and it's found in some of the other measurements and the other items that we'll talk about today, and you'll see it in the various conversations from the business unit presidents as well as Stan. For those of you who are only going to stay for the first 10 minutes, let me summarize the messages for today. The first is you will walk away with a very clear view that we are purposefully building long-term value for the corporation.
Second, revenue growth will improve as the portfolio continues to move to growth markets. In 2016, the title of our annual report was Poised for Growth. 2017, we grew. 2018, we grew again, marking the first time in a decade that the company had grown in two consecutive years. In fact, our growth in the fourth quarter was the best growth that we had achieved in 10 years. That trend of revenue growth will continue as the mix of our business changes. Commerce Services in the first quarter became our largest revenue segment. As the mix of the business has changed, and we made this point last year, revenue growth will accelerate. Importantly, it's revenue growth that comes with profit growth. Lila will take you through this in detail, but our plan calls for Global Ecommerce to become profitable next year.
Coupled with that thought, SMB, which had been loosely characterized as a melting iceberg, will grow profit in 2021 according to our plan. Throughout the course of the plan, and we're going to be specific about the timing, both earnings and cash will grow over the course of our plan to 2022. It would be a touch tone-deaf to talk about our long-term plan and our long-term activities without making a brief comment about the first quarter. To say the least, the first quarter was a disappointment and a deviation from what we expected. Here's the point, and I'll tie it to our comments and our thoughts on the long term. If you really do the forensics on what happened on the first quarter, and we have, with a very critical eye, there were three things that happened.
The first, our best-performing business probably over the last decade, Presort, had a difficult quarter. To some degree, we had seen aspects of this coming for a while, and many of the corrective actions that will remediate those problems were already in flight. Presort had been a business that had been a reliable producer of results. It's got the highest market share in a difficult market. It's got the best margins. It's got great client satisfaction, and it's got very high employee engagement results. While we are disappointed with the results of Presort, it was, by any measure, an aberration from what the long-term trend was. The other two issues, the battery issue that we had in our SMB business, as well as the delay of the NSA, were clearly one-off kind of issues. Here is the broader point.
The broader point is you begin to understand what happened in the first quarter. None of those dynamics undermine our thesis for the long term. They were unfortunate. We own them, but they do not change our long-term thesis for the business. I want to spend a second about how we think about transformations. This is important. The term transformations, I would say, thrown around rather promiscuously within the business industry and to a degree within the investment world. I would characterize it as a contrast from a turnaround. If you think about what a turnaround is, at least from my way of thinking, I would characterize it as a turnaround, as a company that's participating in markets that have growth but isn't performing. A transformation is a company that's participating in markets that are going through secular decline.
The difference is this: if you're trying to turn around a company, it's all about improving performance. If you're trying to transform a company, you need to change the underlying complexion of the enterprise. Where was this company in 2012? In 2012, the company had experienced its fifth consecutive year of mid-single-digit decline. 2007 to 2012, the company had declined 5 or 6%. Why was that? Was it because the company was underperforming? No, it was simply because that 85%-90% of the company's revenue was in the mail market. In large part, the company was performing within the boundaries of what that market was providing. The problem is, if you're trying to secure another 100 years for the company, that story has a very predictable and candidly conclusion that we were not willing to sign up for.
Underneath that, the company had made close to 100 acquisitions from 2000 to 2008, partially to begin to address moving the company to different markets, partially to chase growth. In that time period and in those 90-plus acquisitions, the company acquired $400 million of revenue, and in 2008, still had $400 million of revenue. Underneath the secular declines that the company was fighting against, the balance sheet was very strained. Your degrees of freedom, if you think about how it is that companies move themselves to markets of growth, there's a couple of ways you can do it. You can do it through innovation, and I'll come to that in a second. You can do it through taking on debt. Those opportunities, in large part, were not available to the company.
As you think about Pitney Bowes over the last 5 or 6 years, understand the difference between a turnaround and a transformation is really important. With that as background, there's a couple of points I want to make about transformation, and these are points that you can find in the general literature. BCG happens to have an article which I think is largely on point with how we think about transformations. The first is few transformations succeed. At a very personal level, I started with IBM in 1985. The biggest competitors IBM had in 1985, Wang, Burroughs, Amdahl, Hitachi, Compaq, Digital, go through the list. 10 years later, none of those companies existed, or if they did exist, they existed in the context of a broader enterprise.
More generally, if you look at the Fortune 500 today and you look back 50 years. Less than 70 of those companies that are in the Fortune 500 today were there 50 years ago. It underlines the difficulty that companies have transforming themselves, and there's lots of different reasons why that is. The fundamental point is, it's a difficult journey. There's a couple of other characteristics that BCG points out as it relates to successful transformations. One is the importance of culture. I'm going to come to this, and it is a poorly understood but critically important component of culture, and it's something that we don't spend enough time talking about with our investors, because as you look at the characteristics of what makes successful transformations, culture may be one of the most important characteristics of successful transformations. Balance short term and long term.
This is something that I get, and it's particularly true within companies in the public context, and candidly, it's part of the tension that Commissioner Clayton points to, Chairman Clayton, rather, points to in his letter last week about long-term investing. In it, he wonders and kind of postulates, why is it there are fewer public companies today than there were 10 years ago? His conclusion, which he hypothesizes, which I agree with, is the reason there are fewer public companies today than there were a decade ago, and it's a meaningful difference, is that this tension between long term and short term precludes companies in the public context of doing the necessary things that they need to do in order to transform themselves. Continue to invest in the business.
You'll see this in a minute, but this makes the basic point that if you're going to transform the company, you have to invest in the business, and you have to invest in a particular way. You have to invest in a sustained way. Here's how this dynamic tends to go. Company gets into their one-year, three-year, five-year plan. Inevitably, something happens. Either there's an execution issue, there's a market issue, there's a battery issue, and what happens? Companies will pull back on investment. They'll pull back on the investments in R&D. They'll pull back on the investments in systems. They'll pull back on the investments in products. What I would say to you with the benefit of running businesses and companies now for decades, is if you're going to have successfully sustained investment, you can't go back and forth. You have to sustain those investments.
It's hard to do. I would assert impossible to do if you're chasing quarters or years. Finally, revenue growth is the biggest factor for success. There are, I would suggest, probably a couple of different theories of value creation in the marketplace right now, and this is evolving. I'll characterize one theory of value creation around the theory of Kraft Heinz. By the way, this is a theory which is held by really smart, successful investors, and to a degree, it works, but it only works for a period of time. The theory goes like this. The theory goes that we will put like companies together. In our case, that would be like companies that were going through secular decline, and those companies will find synergies. They'll find synergies in the back office. They'll find synergies in development.
They'll find synergies in go-to-market, that will provide value creation over some number of years. Here's the problem. The problem is, after some number of years, what you're left with is a bigger company that's going through more secular decline. Said another way, if you're really thinking about the long term as we are, you can't save your way out of this problem. You've got to grow your way out of this problem. That's why we talk about revenue growth the way that we do. One of the challenges we get, and I would encourage you to challenge us on this again this morning, is you're chasing revenue growth at all costs. I understand why people think that, but it's not the case. We're pursuing revenue growth in a way that we see a path to profitability that will allow us to transform this company.
What's our theory of the case of how it is we think about creation of long-term value? It's these eight factors: strategy, innovation, culture, clients, employees, governance, board, community, financial stewardship, and importantly, driven by your view of the brand. I'm going to spend a second on this right now because I'm going to get to the other eight in a moment. Brand is important in the following way. The brand is important for us, and I think for others, because it informs who you are and who you want to be. People look at the advertising that we did in 2015 or 2016, and they point to that as a memorable moment for Pitney Bowes, because it was something we hadn't done in 20 years. It was, in that sense, an important milestone. I tell you, the enduring part of that work wasn't the advertising.
It was clarity on who we are and clarity on who we want to be. The point is this: when companies transform themselves, the common mistake that they make is they overreach. They try to be something that they don't have permission from the marketplace to be. That's why the brand is so important to our way of thinking about how we transform the company. We talk a lot about strategy. In fact, if you go back over my previous remarks in other Analyst Day, it was all about strategy. Strategy is important. What I would tell you is, while strategies are important, they're not differentiable in the sense that other people can copy strategies over a short amount of time. In fact, you see that.
You see some of our most prominent historical competitors copying our strategy, which, to a degree, we think is quite flattering. The point is this: while strategies are important, the ability to execute the strategy is even more important. If you think about our strategy in that context, Pitney Bowes, for almost 100 years, had made its reputation on taking the complexity out of mail. Taking the complexity out of mail. What are we aspiring to be? Continuing, for sure, to take the complexity out of mail. We're not walking away from that business. We think that's going to continue to be an important aspect of who we are and what we do. A very close adjacency, shipping, taking the complexity out of shipping. What Lila will talk about is a handful of use cases, cross-border, returns, how it is clients track their purchases and their shipping.
Some of the most vexing and difficult use cases in shipping, the one that's become the Holy Grail within the industry today, of how is it that you compete with Amazon to provide 1- or 2-day or 3-day date certain affordable delivery? Every retailer, every marketplace around the world now has to have a point of view, not just a point of view, but an action plan to be able to compete with what has become a service level that is almost a given within the industry. Operational excellence. Operational excellence is something we'll never be done with. When I joined Pitney Bowes in 2012, the CFO told me, "We've saved all the money we can save." To a degree, the company had taken out $300 million of expense at that point. $400 million later, what I would tell you is we're still not done.
Operational excellence will always be a hallmark and a characteristic of a great company. If you look at the operational plans, particularly in SMB and Commerce Services, operational excellence is prominent within their respective plans. Leverage economies of scale and experience. This is a fancy term, I want to spend a second on it to kind of explain this because it's important to how we think about something that's very fundamental, and that is: what is your right to win? It's one thing to say, "I want to be a prominent player." What I would argue is, within the world of shipping, we're not a prominent player within the broad world of shipping. We're a prominent player within some very specific use cases, but specific use cases where we think we have competitive advantage. Leveraging scale and experience is all about your right to win.
Let's uncouple those two. First, economies of experience. If you think about economies of scale. If you think of scale, we think of scale in a couple of different dimensions. The first is the number of countries we participate in. When I started with Pitney Bowes, we operated in close to 100 countries. Today, substantively, we operate in about 10 countries. Places where we have scale, places where we have critical mass. Second dimension of scale that we think about is in terms of clients. Again, lots of different ways to think about this, but the easiest way to think about scale as it relates to clients is in our SMB business, where we have hundreds of thousands of clients. We have hundreds of thousands of clients, but importantly, we tend to sell them just one thing.
That creates a tremendous opportunity because you've already incurred the cost of client acquisition. The third dimension of scale that's important to us is around technology. If you think about Pitney Bowes, and one of the things we think about all the time is, what is the theory of the case of why these units are better together versus should they be three separate companies or four separate companies? That drives you to the actions of how it is that you make these businesses accretive to one another, how you make them advantage to one another. Whether it be Commerce Cloud or our technology platforms, our infrastructure platforms, all of the businesses ride off of a common technology chassis. That provides scale to these businesses that they would not be able to achieve and not be able to afford if they were standalone businesses.
The next comment I'd make about scale is where we can't find scale, we have aspects of our software business candidly, that we lack scale, we'll partner for it. That's why, Bob will talk a lot about our partnership strategies, and those are important because they're viable ways to take our products to market, but they also offer us scale that we would not be able to achieve on our own. Experience. Economies of experience. The first thing I would say, quite simply, is the space between mailing and shipping is not a big space. Much of the learnings that we have earned over the last 100 years in the mail market serve us remarkably well as we think about moving to the shipping market. Particularly, Lila may talk about this a little bit, if not, we can take it in questions, answers.
If you think about our knowledge of how mail moves, we know in particular lanes how long it takes a mail piece to get from point A to point B. We know that because our Presort business moves 25% of the mail in the U.S. That insight of knowing how long it takes a piece of mail to get from point A to point B is an incredibly valuable insight in the shipping business when you're trying to offer date-certain delivery. Experience in our mail is highly leverageable to our desire to be a winner in the shipping market. The second point where we leverage experience, Lila will talk about this very explicitly, is our Presort business.
If you think about our Presort business, which has now become, as I said at the outset, one of our most successful business, it started out, in many ways, very similar to Global Ecommerce. A small business, sub-scale, that we invested in the network over a period of time to create the kinds of scale that you needed in order to be successful in that business. That same recipe that has made Presort such a successful business and a market leader is precisely the same recipe that we're using in our Global Ecommerce business to drive to profitability. The third dimension of experience that's important, I talked about this at the outset, was around client experience. You see this particularly in our GFS business, our financial services business. We have decades of credit history on hundreds of thousands of clients in this country and around the world.
Why is that important? If you think about right to win in the financial services business, there's two impediments. The first is the cost of client acquisition is incredibly expensive. Well, we've already incurred that. The second factor that tends to disqualify most competitors and most entities in the financial services business is credit risk. We have decades of credit history with very low default rates in our core financial services business. Taking that experience that we have earned with those clients over the last decades and applying it to new market gives us the right to win. That's why economies of scale and experience are so important to us, because you can talk about in very fancy kind of academic terms, but in the end, it's about what is your right to win.
In every one of the businesses that we're in today, we think we have the right to win. That drives how we think about what markets we participate in. Innovation. What I would assert to you is Pitney Bowes has been a deeply innovative company for almost 100 years. That said, I would say our innovation agenda was somewhat misguided before 2012. There's lots of different ways to dimensionalize it, but the simplest way to dimensionalize it for me is if you look at 2012, the amount of revenue that came from new products was 5%. Think about in the context of a company that's trying to move to markets to transform itself. If your innovation investments are not yielding the kind of results that you need, it's impossible. 2018, 20% of our revenue came from new products.
If you look at 2019, Jason and Lila and Chris, Bob will talk about this, it will be more. Our innovation pipeline is as robust today as it has been, I would assert, in this company's history. Culture. This is something that I mentioned at the outset that I think is critically important and well understood. If you look at the literature of successful transformations, they'll tell you that revenue growth is the most highly correlated factor with successful transformations. You know the second most highly correlated factor with successful transformations? It's employee engagement. It makes sense if you really understand the dynamics of a business, because without employee engagement, you don't have the team to carry you over the finish line. We've known this from the outset. In some ways, this is something that I inherited.
I would tell you that Pitney Bowes has had an engaged employee base not just for the last six or seven years, but for the last six or seven decades. It may be in the end of the day when this transformation is successful, one of the key reasons why. We understood the importance of culture more broadly, however, and we have been, since 2012, benchmarking ourselves against high performance companies that we aspire to be. We are not, let me be clear, where I want to be in terms of high performance yet. We're benchmarking ourselves with the help of third parties against companies that we do think are high-performing. If you look at the five metrics that we benchmark ourselves against, in two we're now comparable of the metrics.
In the other three that we think are important, we've closed the gap by half. In fact, in one, we've closed by two-thirds. If you think about culture in the context of creating, and this is the way I think about culture. If you think about culture in the context of creating value, organizational value, it makes sense. In the end, if you can't create value organizationally at an enterprise level, then your ability to move the company or transform the company is limited. Four interesting statistics about clients, I'll tell you, it kind of misses the point. What has been instructive to me from the outset, and more recently encouraging about Pitney Bowes, is the kinds of clients we have. If you look at our SMB business, the sheer volume of clients we have tells you a lot of what you want to know.
Hundreds of thousands of clients all around the world. In our software business, which candidly is now performing well but struggled for a bit, I think it's even more instructive. If you look at the number of Fortune 500 clients, some of the most sophisticated consumers of technology in the world, we have the preponderance of those clients using our software today. It's not because of our brand. It's not because of our great reputation within the software industry. It's because we've got something that others aspire to, and that is software that works. It sounds trite, I will tell you, having come from the technology industry, software that works and software that creates value is unique. More recently, I had the opportunity to attend our client conference for commerce services, Global Ecommerce, a conference that Lila had a couple of weeks ago in California.
It was striking, and it was striking in the following sense. The clients that were at that event, first of all, there was 200 clients. Then if you look at the specific names of who those clients were, it was a who's who of within the retail industry and the marketplace industry. That in and of itself was striking. What was more striking is to think about our Global Ecommerce business three short years ago. Three short years ago was one client, one really important client, for sure, one really great relationship, for sure, but it was one client and one use case. Today, we have over 700, I think 800 clients in that business. Here's the broader point. You can kind of get lost in all the statistics.
Our Global Ecommerce business for sure, but also our software business, our SMB business, our financial services business, have something that others aspire to, and that is we've got offerings and products that people want. You can get lost. You can get lost in the mechanics of transformations and GAAP measurements and non-GAAP measurements. I can make it very simple for you. If you want to transform the company, you need to have stuff that people want. Absent that, it doesn't matter. You can't save your way out of the problem. You can't move the company fast enough if you don't have offerings and capabilities that people want. What you're going to hear about in the next presentations is we've got stuff that people want. Every one of our business improved their client satisfaction last year. Every one.
In our Presort business, we have best-in-class client satisfaction in the industry. If you look at the underlying interim measures for client satisfaction, they're going to continue to go up. You don't find it on the income statement, per se. You don't find it in your GAAP to non-GAAP reconciliation. I'm not sure I've ever gotten a question about it, but I can tell you that unless you've got clients, you don't have a business. I said a few minutes ago that Pitney Bowes enjoyed a reservoir of goodwill with their employees. There's lots of different ways to measure it. Employee engagement is one, there's others. Suffice it to say, as you look at the relationship between Pitney Bowes and our team, it is a tremendous asset.
I continue to be proud of the decision that we made last year to take the benefits from the tax bill in the U.S. and pour it back into the wages of employees. Not just a one-time benefit, not just a one-off, but a sustained investment in employee wages. It tells you everything you want to know about how we think about the importance of our team. Governance and board. We have had an independent chair for a long period of time. 40% of our directors are women. I made the decision in 2012 to change our long-term compensation, which before 2012 was cash-based, to equity-based. I did it for a very simple reason, and that was, I believe if you were going to have a long-term sustainable corporation, you needed to align the interests of the executive and management team with shareholders.
I would say more recently, we took the leading edge action of changing, and we did this with input from some of our investors, some of whom in this room, of how we thought about the tenure of the board. I'm looking at Steve, who was critical in how we thought about this. To a retirement practice that was driven by age, to a tenure-based philosophy of board experience that valued certainly long-term members, but also prescribed that you needed to have a continual level of refreshment over time and over a thoughtful kind of way to ensure that you had skills that were contemporary and current with where the business was set, because our business has changed so much and so fast.
Community, I won't belabor the point, but fairly clearly, Pitney Bowes has been a company that's been invested in the communities for a long period of time. Two weeks ago, Pitney Bowes was once again recognized by the United Way of Western Connecticut of our outstanding service. That's something that sustained this company for close to 100 years. It will continue to sustain who we are and what we do. Financial stewardship. Let me talk about this for a second. The first thing that I would say is the obvious, is that our TSR has lagged, no one is happy on the management team. I know none of our current investors are happy with where the current shareholder return is. That said, if you believe what we believe, that is we're taking the actions to create long-term value, you think about this slightly differently.
It doesn't necessarily make you any more happy with where the shareholder performance has been, but it gives you confidence that the company is doing the things it needs to do to create long-term value. Underneath the shareholder return, however, if I were to describe to you a company that moved from secular decline five consecutive years to a company that's now growing and growing in an accelerated manner, and did that by the reduced debt, reduced expense, reduced working capital, and yet continued to make the investments in the brands, the systems, the people that we needed to do, you think about financial stewardship perhaps in a slightly different context.
More work to do here. I would assert to you that as we contemplated what needed to be done, there was massive change that was required to move Pitney Bowes to a company that had a viable future. That massive change, to a degree, created two dynamics. The first was, particularly in 2016 and to a lesser extent 2017, there were so many things moving around, it hurt our visibility, and it hurt our ability to provide clear guidance externally. The second thing I would say is, given the massive change that we needed to make, it required huge investments. Now, we made those investments, and we sustained those investments in the context of taking $400 million of expense out. It wasn't something that we could do on the cheap.
Those two dynamics of the change that we incurred, the stability or lack of stability it created along with the investments, I would suggest was many of the dynamics that hurt our shareholder return. I would say more recently, some of the hangover with the United States Postal Service has also been an overhang on the stock. I would say, we can answer it more in the Q&A. I would just say this about our relationship with the Postal Service. Our relationship with the Postal Service has never been better. It's never been better. We have multiple different conversations around innovation, partnership, go-to-market , that will be tremendously important going forward. We're not running away from the Postal Service. They're intrinsic to how we think about our future, and really important to how we think about our plan going forward.
Let me conclude with three basic points. First of all, hopefully we've made the case that we're taking the necessary long-term actions in a holistic way. In a holistic way to create long-term value. At the very least, you now know our theory of the CRACE, of how it is we invest, how it is that we think about long-term value. It's not just financial stewardship, it's not just one particular metric. It is how those eight factors together drive long-term value. Second is we're building off of core capabilities where we think we have a right to win. We're not shooting for the moon. The space between mailing and shipping and some of the adjacencies around financial services and software are logical adjacencies where we have the right to win.
Finally, revenue growth, we pointed to in 2016, is perhaps the most important factor right now in terms of our future success. Again, you can't save your way out of the kind of problem that Pitney Bowes had. The investment will continue, but again, go back to what we're going to lay out for the rest of today. Commerce Services profitable in 2021. [SMV growing profit in 2020 or Commerce Services growing, probably Commerce profitable in 2020] SMB growing profit in 2021. It's revenue growth, but the earnings will follow. Thank you. Now I bring up Jason to talk about SMB.
All right. Thanks, Mark. Oh, sorry. Hey, good morning. Look, Mark did a really good job, I think, talking about our transformation, how we're leading for the long term at Pitney Bowes. I want to take a second and just step back and talk just for one minute about our history, because I think it's really important to anchor a couple of thoughts. When you hear about the businesses today, whether my business, Lila's, Bob's, Christopher's, none of those businesses are new thoughts. They all have long histories of success. When you think about the SMB business, it was born out of that first innovation in 1920, simplifying commerce for our clients, and we've been innovating ever since. Think about financial services. We started offering financial services to our clients in the 1960s, giving them access to capital to grow their businesses.
In the 1990s, we first put people, places, and things together in software offerings, and we started innovating in shipping too in the early 1990s as well. When you look at the last five years that Mark talked about, we've been building a different foundation for our business. We've been transforming so that we can continue to evolve as we go forward. We introduced the Data Lake. We rolled out Commerce Cloud. We connected our clients digitally via the Your Account portfolio. We rolled out an entirely new enterprise business platform that really is the underpinnings, the foundation of all the evolutionary steps that we're going to take as we go forward. The interesting piece about this is we're starting to yield those benefits. Mark talked about a few of them. You think about 700 e-commerce clients growing from just one.
Continuing to innovate around data, working with partners to go after clients in ways that we haven't in the past. Rolling out Financial Services capability. Christopher's going to talk about Wheeler Financial, which we launched this year. We've transformed what once was a postage meter into an open platform, digitally connected, IoT-enabled mailing and shipping solution. I'd argue that our success in these spaces isn't a coincidence. We're really good at enabling commerce. We've been doing it for 99 years. What you're going to hear about this morning in each of these businesses is that in many ways, we're just getting started. Nowhere is that more true than in the SMB business. SMB is really reinventing itself in profound ways. I don't know what the corollary of a melting iceberg is that Mark talked about, but we're the opposite.
We're leveraging our core assets, our core capabilities, what's made us successful over the last 100 years, we're building a new path forward for our business, importantly, a new sustainable path forward for the SMB business. Part of the way we're doing that is we're going after natural adjacencies. That's a word that you're going to hear a lot about today. We're going after spaces where we have the expertise, in some cases, a head start, and certainly the brand permission to compete and win. In the SMB space, in particular, you can see the success of this transformation all around us today. I'll talk about this in a few minutes, give you some examples. This is not aspirational. You can see the change today.
These things give us confidence in that third statement, which is really important, which is we have a path forward for our SMB business, a path to growth, EBIT flat or better year-over-year in 2021. I'm going to pause for a second because that is a very significant change in how we think about our SMB business. As I said, signs of this change are manifesting themselves all over in SMB. We've expanded the dialogues with our clients from mailing to sending, talking with them about packages, flats, in addition to mail pieces. We've moved many of our offerings and a number of our routes to market from physical to digital. I would say that we've shifted gears over the last year or so in our ability to bring demonstrated value to markets and to clients. I'll give you a couple examples of this.
If you think about the launch of our SendPro C device, which was our flagship mailing and shipping solution we launched in fourth quarter 2017, I'll talk about it in a few minutes. Use fourth quarter 2017 as one marker, end of this year as the second marker, so roughly a 2-year span. In that 2-year span, we'll have refreshed 75% of our product portfolio in SMB. 75% of that new products, 75% of those new offerings are shipping enabled. If you think about our ability to bring new value to clients, as Marc said, putting it in the hands of clients is what's differentiating, not just having it. In first quarter 2018, and think about that, it was just one quarter after we announced the SendPro C, so we finally had some really interesting new value.
In first quarter 2018, about 50% of our transactions in the SMB space brought new value to clients. We gave them a new offering, a new capability. First quarter 2019, 70% of our transactions are bringing new value to our clients. That's a substantive change. Through the first four months of this year, we're on pace to deliver about 30,000 new placements in our business. What's really interesting about that is if you look at the number of new clients that we brought into the business in the first quarter, 83% of them came in on our SendPro platform. That's really important. What that means is they came in not just as mailing clients, but they came in as mailing and shipping clients. It's a substantive change for us. It's been hard work building this foundation.
It's taken some time and some effort, but we're leveraging that foundation for success today. As we look forward in the SMB business, there's four strategic priorities that we're focused on that we think are really going to help us accelerate this change over time. Let me kind of tick those through for you. One, we're going to continue the hard work of simplifying and repositioning our portfolio for the future. Two, we're going to continue to invest and go after that logical natural adjacency in shipping. Three, we're really focused on making sure that we're rolling out this new technology, these new capabilities to all of our core markets, and really accelerating the rate and pace of that innovation in our business.
Four, we're going to capitalize on other adjacent opportunities farther afield, but still near that sending space, where we have the opportunity, the brand permission to compete and win. Let me tick through each of these for a minute. First, simplifying and repositioning the portfolio. SendPro C launched in fourth quarter 2017. In many ways, it really epitomizes the transformation that we're undergoing in SMB. With SendPro Online, which is the web-based version of our SendPro offerings, those two products really make up the core or the anchor of our portfolio as we go forward. The SendPro C is our core mailing and shipping solution. It's built on an open platform, uses Google's Android operating system. It's IoT enabled, and it's got a simple touch screen interface. It really exemplifies that promise that PB has of taking the complexity out of our clients' business.
The SendPro C has got great client feedback. It's earned impressive industry accolades. In particular, we've won some pretty impressive design awards that put us in some pretty elite company. Not many people a couple of years ago would have thought of PB in the same breath that they talked about Google, Tesla, and Nest. There we are. This platform enables us to do some really cool things. It enables us to see almost in real-time how clients are utilizing our offering, to learn, to test, to adapt, to try new capabilities, and then to deliver new functions and new offerings seamlessly via that IoT connected device. The SendPro C is our core middle-of-the-line product. If you think about our product portfolio, the SendPro C is really targeted at, just in our existing client base, 350,000-400,000 units.
If you think about the first 18 months since launch, we've shipped over 80,000 of those SendPro C devices. In the first quarter, we shipped 18% more than we did the previous first quarter. Clients are really excited about SendPro C. Our SendPro family, however, is much more than just the SendPro C, and we're going to continue to reposition the entire portfolio and ensure that we can bring new types of value to our clients across the product line. Let's talk about this simplifying concept, though, for a second, because it's really important, and there's a couple nuances to it. The first is we're going to continue to move to fewer and more standard platforms. A few years ago, if we had announced the SendPro C, you would have seen multiple models, three to five base models.
Each of those models would have had multiple configurations and virtually limitless numbers of features that you could attach to that. With the SendPro C today, we have two models. Those two models are feature-rich. We've put everything in there. We've done that for a couple reasons. One, it's easier for our sales teams to understand the value and talk to clients about it. Two, it's a lot easier for clients to understand the value that they get. Three, it positions us really well against competition. We're going to continue to shift to open platform stacks. It's easy to upkeep the technology, to work with those technologies when you're on open platforms. We're going to simplify our pricing structures. We're going to continue to enable cheaper and more effective routes to market. We're retooling our client experience.
When you take all those things and put them together, the simplified product portfolio, simplified pricing, process, and tools, it lets us take complexity out of our business, which is critical. It lets us yield operational efficiencies by taking upstream and downstream cost out of our business as well. Our second priority is going into that natural logical adjacency of shipping. The reality is virtually every one of our clients ships. There is eligible shipping volume, sending needs all around them, and we can help them save money and reduce complexity, just like we did with mailing. We have a ready-made opportunity here in SMB, whether it's with SendPro C, SendPro Online, or a new version of SendPro that we launched last year in January, SendPro Enterprise, which really targets our highest-end clients in the client base. We're taking advantage of this shipping opportunity in multiple ways.
There's an exciting new member of our SendPro family, the SendPro Tablet, which we just announced. It's a great example of taking a familiar and exciting technology and using it to help our clients make their workflows more effective and more efficient. Let's take a look.
You need a competitive edge. You rely on technology to gain an advantage, especially if it's designed to improve your business. That's precisely what we've created. Introducing the SendPro Tablet. It's the simpler, smarter way to ship. We've taken technology that you already know how to use and customized it specifically for your unique shipping needs. Featuring a large, lightweight tablet from one of the global leaders in technology, the SendPro Tablet combines innovative mobile technology with the unparalleled shipping experience of Pitney Bowes to deliver the industry's most versatile solution. SendPro Tablet simplifies shipping with USPS, FedEx, and UPS, helping eliminate the need to leave the office to drop off packages. Use its camera to quickly capture and populate address fields, make repeat shipping easier with the voice-activated presets. It's far more than a mobile device.
SendPro Tablet is designed to let multiple users ship from virtually anywhere in their office with a 70-pound scale, a wireless-enabled shipping label printer, and a Bluetooth keyboard and charging dock. When it comes to saving money, SendPro has you covered. The shipping rate selector lets you easily toggle between all three carriers' shipping options to choose the best rate and delivery time available. Plus, the preloaded apps make every aspect of multi-carrier shipping easier for anyone in your office. Confidently weigh packages, compare prices, print labels, and save every time with the innovative SendPro Tablet from Pitney Bowes. For more information, visit us online.
We're just starting to roll out the SendPro Tablet, but the initial client feedback has been outstanding. They love the voice commands. They love the portability. Most of all, they love the camera. Being able to capture addresses and import them right into the app and then print a label in seconds from wherever you are, it is a common and compelling solution to a clear and obvious client pain point. This ability to participate from an SMB perspective in the shipping space significantly changes our outlook. We've successfully created a number of new offerings and capabilities. By the way, some of them leveraging the technologies and capabilities from Lila's business, from our Commerce Services partners. We've been able to create a business that is already growing in the SMB space. In 2018, SMB clients printed 50% more labels than they did the prior year.
We've just got to get this capability into more of our clients' hands and make sure that they're consuming the full value of that capability more effectively. It's also about bringing new clients into the SMB space as shippers. I mentioned earlier that 83% stat. 83% of our new client acquisitions in first quarter came in through the SendPro platform. Part of that's because we've changed our targeting slightly. We've started to target not just mailers as people we want to bring into portfolio, but shippers as well. What we've found is when we do that, they actually spend more money with us on shipping. In fact, in the second half of last year, people who we had targeted with the shipping profile spent five times as much with us on shipping as they did on mailing. Shippers love SendPro.
Clients also love that multi-carrier feature that you saw, the ability to compare service and rates across different carriers. It is differentiating, and it's easy to sit with a client and have a quick conversation with them on how they can save money and simplify their business. SendPro Online continues to evolve. We continue to learn about how our clients use it. We continue to take friction points out of the process for them. Today, we have about 30,000 clients on our SendPro multi-carrier subscription offering and another 100,000 on the USPS-only version. I talked about SendPro Enterprise. SendPro Enterprise really targets our largest clients really with multi-location needs. You have a headquarters, remote offices, and even home office shippers. SendPro Enterprise allows us to have a solution for that entire stack.
We can really sweep the floor with the shipping and mailing capabilities now that we have with SendPro Enterprise. It has been hugely successful since we launched it in first quarter of 2018, and in fact, we had seven times the number of orders in the first year than we planned in our business case. Clients like SendPro. Now, admittedly, we still have work to do getting the shipping capability into more and more of our SMB clients' hands. There is a good news story here. We have the clients. Marc talked about how important that cost of acquisition is. We have the clients today. Our clients ship, and we now have offerings and capabilities that are compelling for them. It is actually a really good place to be. We have also been focused on that third priority, which is accelerating the speed of innovation globally.
There are two thoughts to this, which I want to go through. The first is around enhancing our portfolio. Making sure that we have modern and refreshed shipping and mailing capability in each of our core markets this year. That means we are going to roll out 20 significant product launches globally in 2019. That is a rate and pace of development with our international markets that we have not seen in a long time. The second goal is to really focus on how do we improve the rate and pace of our experimentation. How do we leverage those capabilities around the globe? How do we leverage these different communities who have good and compelling thoughts that can bring us new offerings and new capabilities? Perfect example is something that we are doing in Australia with a company called Sendle. Sendle has some really compelling, unique capabilities in the Australian market.
They have unique relationships with some carriers there. The team got together with Sendle, paired it with SendPro, and in the span of six months, it went from idea to a offering launched in the market. Within the next six months, we grew our client base in Australia by 10%. That is pretty spectacular, and now we can go back to those new clients and add in other SMB offerings and capabilities. It is experiments like that that are important to us going forward. We have got to continue to gather the learnings, figure out how we replicate those successes, and roll them out to other markets. It also is a sign of the different rate and pace with which we can innovate now, because so much of our innovation is on digital and SaaS capabilities, not just tied exclusively to hardware.
One of the most exciting longer-term opportunities is this fourth one, and it is the ability to go into other natural adjacencies beyond just shipping and mailing, adjacencies that can be leveraged by using our existing infrastructure in this open platform capability. A great example is using data and analytics. We have been working with clients for a number of years. We have good information on them. We have their credit histories. We have their product profiles. We have their usage profiles. We have IoT-connected devices that gives us real-time data and information on what they are doing today. We took all of that information, brought together our data and analytics experts from across Pitney Bowes, and we sat with five of our largest clients, and we talked to them about their pain points, about their inability to get usable and actionable information across their mailing and shipping environments.
As a result of that, we created a new offering, which we've just launched, called SendPro Insights.
Easily manage your total mailing and shipping expenses with a single complete view across your business with Pitney Bowes SendPro Insights. You can access SendPro Insights from your internet browser or download and install the SendPro Insights app on your mobile device. Centrally monitor all products across locations. Manage divisions, locations, and users within your enterprise. Select a location within a desired timeframe to get a complete snapshot for the location and gain valuable insights for that location, including postage and monthly spend insights, analyze data by location, carrier, mail class, and accounts, spend trends, hotspots, and comparatives. Get personalized recommendations and tips to increase productivity and save costs. Pitney Bowes SendPro Insights. It's all about your business.
Data and analytics is a clear opportunity for us, there's other opportunities for us to leverage our core assets in ways that are new and create new revenue opportunities for us as we go forward. Let me tick through a couple of those. Probably the most obvious example is the one that you're going to hear about next from Christopher, that's around financial services. Wheeler Financial is a way for us to drive new revenue streams for our business, I won't steal his thunder, but I will say our teams in SMB, our sales teams, our client teams, are really well-positioned to bring this offering to market.
One of the most interesting opportunities long term that we've been talking about for a little while now, you would have heard it from me last year at Investor Day, is really this opportunity around partners and apps, this notion of a partner and app ecosystem that can be delivered to our clients via our existing platforms. We had great success last year rolling out 10 apps to our 80,000 SendPro C clients. Some of these apps were developed via global hackathons. You'll remember we talked about this last time. We went out and engaged with developers around the world, both inside PB, importantly outside of PB. We educated them on our clients. We educated them on the mailing and shipping environments. We educated on some of the key pain points that our clients face every day.
We asked them to come back with simple and compelling solutions that we could deliver to our base of clients. We also went out and partnered with selected third parties who thought that they had value that they could bring that would be meaningful for our clients as well. This is one of the most interesting opportunities for us as we go forward. It is the power of an open platform and a large client base. I am really interested to see how this transpires for us. Who would have thought about Apple Pay or Alexa? That's the power of an open platform and a large client base. One of the most interesting early examples of this we have is with a company called Deliv.
For those of you who don't know Deliv is a same-day delivery service in places around the U.S., in North America, growing really fast. Deliv does same-day delivery service, much like Uber does. They crowdsource the delivery capability, by and large. We work with Deliv through open APIs and created an app that sits right there on that SendPro C device. Clients can now print labels, schedule pickups right there, just like they do with mailing and shipping. It gives them an entirely new set of capability to use on that one device. The next phase, by the way, we will enable Deliv as a carrier. Just like you saw in the multi-carrier features, you had USPS, UPS, FedEx, and now you have another set of options. These third-party apps and partner opportunities make us more sticky with clients. They make us more relevant.
It helps with retention. We can monetize these opportunities as we go forward. This apps and partner play, this notion of a partner platform for us, is going to be really important as we move forward. The last one I'll mention here, just by way of a different type of thought, is in leveraging our services capability. We have a large services organization around the world. There is actually a team within that services organization who effectively incubates and prototypes new opportunities for us, some of which become one-off, and we let them be, but some of which we pull into the broader portfolio. For example, they were very involved in SendPro Insights, in that third module you saw, SendPro Advisor. Having the ability to go in and help clients understand and learn what to do with the insights that we're bringing forward. It's a small group.
They found some gems. Last year, they grew their business 70%. These plays, just like shipping, significantly change our addressable opportunity, which is important for us because while we play in a big market, the mailing market, it's a market seen to decline. It has headwinds. The mailing market is going to be critical for us as we go forward. We are not backing away from it. As we move into shipping over time, our market increases significantly. When you recompile that opportunity, over time, we move from markets that are in decline to markets that are growing. That doesn't include, by the way, the full value of those other types of opportunities off to the side there, Wheeler, partners, and app ecosystems. Look, it's going to take time.
We're still heavily weighted in one of those columns, but it's a very important shift in our addressable market for the SMB business. All right. Let me summarize our strategy, and I'm going to do it in two parts. Our focus is on creating and delivering new value to our existing client base. That new value enhances relationships, makes us more sticky, helps with retention, and ultimately locks in those profit and cash streams. That new value, think shipping, financial apps, partners, app ecosystem. That new value also allows us to create net new revenue streams with our clients and with new clients. Said differently, our strategy is to deliver new value to our existing client base to lock in revenue, profit, and cash while creating new revenue opportunities in our existing client base and beyond. Let me end where we started.
We are redefining our opportunity in the SMB space, going after these natural adjacencies where we have the brand permission, the expertise, and the offerings to be successful. Signs of this change are happening all around us. It's starting to pay off. I would point out, it's paying off for us while some of our competition is still contemplating investing in transformation and investing in growth. It's happening for us today. What's different and compelling about the SMB business is the way all these piece parts are coming together. Refreshed product portfolio, shipping, SaaS and digital solutions, Wheeler Financial, operational efficiencies. All of those things give us confidence in that third statement, that SMB has a path to growth and we will be flat or better on EBIT in 2021.
It's a really exciting time for SMB, and I look forward to talking to you about where we are and where we've come next year. With that, let me bring up my friend Christopher Johnson, who leads our Global Financial Services business. Chris is an incredible partner for us in the SMB space and is surprisingly innovative in the things he's doing in this space, and you'll hear about that now.
All right.
Thanks, Chris.
Thank you. Thank you, Jason. Good morning, and it's a pleasure to be here with you all today. As Jason said, my name is Christopher Johnson, and I lead the financial services division here at Pitney Bowes. Today, what I'm going to do is I'm going to walk you through a progress update on the business, as well as share with you some of the new and exciting innovation that is pivoting us towards growth. Let me first start, however, with a few ideas around 2018, which I think are important for you guys to take away. It was truly a pivotal moment for the financial services business in terms of laying some of the critical foundations for growth, as well as positioning us for success over the long term.
I think it was also equally important with respect to evidencing the strategic relevance that financial services plays within Pitney Bowes with respect to showcasing how the alignment of the businesses that we have across the enterprise are truly differentiated, better and stronger together. Let's start with a quick reminder of how financial services fits into the overall Pitney Bowes. We're an important part of the company, an enabler, as well as an essential component to the fabric of the Pitney Bowes franchise. In the SMB business segment, we provide captive equipment financing, working capital lending, and partner payments that fuel our Commerce Cloud, as well as enabling the US Postal Service. In Commerce Services, amongst other things that we do, we provide critical working capital capabilities and deposit capabilities for our Presort Services platform. We also provide shipping and logistics, finance, payment processing, as well as fraud prevention.
Organically within the financial services business, we're building on decades of economies of scale and experience to capitalize on adjacent growth opportunities that are essential to our customers. Altogether, we enable over 80% of the products and services that we sell as a company. We're an important part of the growth equation across this business and are an important driver of the value, differentiation, and margin generation here at Pitney Bowes. I think we have an impressive resume of how we create value across the company, and I think it's fair to say that this is certainly different than your father's Pitney Bowes. A year ago, I shared with you a new vision for GFS centered on expanding shareholder value. I spoke about our commitment to position GFS towards growth, principally driven by three objectives, starting with improving our performance in our core captive financing business.
Over the last year, we've made tremendous strides in stabilizing our lease net finance receivables or simply put, the level of assets in our portfolio. Five years ago, we had close to $1.6 billion of lease assets. Through 2017, our portfolio had been contracting at a rate of about 11%-12%. When you look at what we've been able to achieve in 2018, the results do speak for themselves. The operational focus and rigor that we have implemented in our core captive finance business has cut the rate of decline by nearly 75% and is producing real economic benefits for our company. Our performance trend has also continued into 2019, and there's no better evidence than the continued improvement in the decline profile of our finance income.
In the first quarter, finance income fell 2% year-over-year on a constant currency basis, which is the best result in a very long time. What I would ask you to do is if you take nothing else from my presentation today, please remember that this is an important proof point of how Pitney Bowes is creating a better earnings and free cash flow profile for our investors. Although significantly improved for all the finance majors, I do know that negative two is still a decline. To that end, we have worked very hard over the last 12 to 18 months to launch a new set of capabilities to pivot GFS into growing and expanding markets with the ultimate goal of getting back to growth.
As hopefully many of you have seen, we successfully launched in the first quarter of 2019, our new third-party equipment finance business, and it's my pleasure to introduce to you Wheeler Financial from Pitney Bowes. Wheeler Financial is an equipment finance business that focuses on providing small and lower middle-market companies on Main Street with access to capital necessary to fuel their growth. We will focus principally on our existing customers, where we have a distinctive advantage, choosing purposefully to create more value and deeper client differentiation in the following six segments: business services, construction, healthcare, manufacturing and industrial, technology, and wholesale and retail trade. Why are we doing this? It comes down to three simple reasons. First, we know that this is a large and also growing market. Second, we know that this market is massively underserved, and our customers need us now more than ever.
Third, we have both the rich history and the capability to serve, compete, and win in the small business financing market. Small businesses are not only growing, but they are also heavily investing. Arguably, this is the best business environment for small businesses in the last 50 years. As they grow, small business owners are investing in their companies to support that growth, and CapEx has expanded at an unprecedented rate over the last 10 years. Here's the point. We're positioning financial services right smack in the middle of a market that is growing at a rate of close to 10% per year. Let's take a closer look at this market together. In spite of the fact that small businesses are doing so well, there is less capital available to them. Loans to large corporates have consistently risen for the last eight years in a row.
In fact, corporate debt in the U.S. is at the highest levels it's been since we've been keeping track of records here in the U.S. However, on the other hand, loans to non-farm small businesses have been steadily declining year after year for the past decade. When we look at why, well, that reason is not that hard to find. Banks that focus on small businesses have been in steady decline. The number of institutions in the United States that have less than $100 million of assets under management has precipitously fallen, close to 80% in the last 20 years. In addition, large traditional players that were central to this market, such as GE Capital, are no longer around. Imagine that. This is the largest sector of our economy, and it's the workhorse of our economy, but it's a segment that has declining financial support.
There simply aren't enough sources of capital out there for small businesses in the market, and that's where we come in. Wheeler Financial is uniquely positioned to capitalize on the opportunity in this space. First, we have customer relationships. Pitney Bowes has a very large network of small business clients, and with over 750,000 active customers, with an average relationship of 8 to 10 years, we have a large advantage over other competitors with respect to the cost of customer acquisition, which as you know, and Marc spoke of, represents one of the biggest challenges for market participants. Second, we have deposits. We have access to a large pool of deposit capital at a very competitive cost of funds. This provides us with another significant advantage over other market participants that gives us the flexibility to be both competitive, while at the same time earn higher margins.
Third, our banking platform allows us to sustain this competitive advantage. We have the ability to raise incremental deposits and access the debt capital markets in support of the Wheeler Financial balance sheet. Fourth, and perhaps most importantly, are the proprietary data insights, the analytics, and the experience that we have with our customer base. This affords us truly unique advantages with respect to credit trends, the payment histories, the cash flows, and ultimately, the portfolio performance. Now, if I were sitting in your seat, I would want to know, how are we going to maintain a safe, secure, and sustainable business? Look, I could walk you through all of the well-thought-out and the valuable concepts that we are doing in the business and we have employed in the business, but I'm going to take a slightly different approach this morning.
While these are all certainly things that are the right thing to do, for those of you who don't yet know me well, let me assure you that I've been in this business for a very long time, and I understand the inherent risk in this business model very well. Suffice it to say that operating a safe and secure business is paramount to everything that we do. This includes ensuring that we have the right principles, having a sharp focus on the assets that we will finance, as well as a disciplined approach to credit underwriting. Maintaining a safe business also means ensuring operational excellence, and we're committed to doing things right. Although we are looking at different equipment types to finance, the core nucleus of our underlying processes that we've been doing for the last 30 years don't change because it's a third-party manufactured piece of equipment.
Our obligations to originate and structure deals appropriately, to underwrite customer credits, to manage the assets, to service the portfolio, don't change because it's a third-party manufactured piece of equipment. Also, I think it's important here to articulate that we are financing essential use equipment, and it's important to render it explicitly clear that the majority of the portfolio is intended to be loans versus leases that don't carry a residual value. We've spent the last 12 or 18 months building a world-class team made up of industry veterans, fueled by world-class technology that allows us to be both flexible and agile. The net-net here is that we have the depth and the breadth, and we are specifically designed to succeed in the small business financing market. Next, and very important to long-term success, is our approach to funding.
Our approach here is also well-crafted and designed to create an advantage over other market participants. What you may not know is that we operate the Pitney Bowes Bank Incorporated, Member FDIC. Wheeler Financial, as well as our working capital loan business, including shipping and logistics finance, is a part of our bank and will be funded out of our bank. We have access to excess deposits at a very low cost of funds that we will deploy to fund our business expansion in loans and leases. This is an opportunity for the company to generate greater returns than we have traditionally yielded in treasury securities. Looking forward, we will raise incremental deposits to fund the business.
Also, as equipment finance is a very attractive investor asset class because of its relatively low risk profile, we will also use the debt capital markets, including syndication and securitization, to fund this business over the long term. Lastly, with respect to Wheeler Financial, here's what we expect to see financially in 2019. As we outlined in our first quarter earnings call, we expect volume origination in the range of $50 million-$70 million. This will scale higher over time for sure, but we will take a prudent approach in the initial days. Net interest margins will be better than the industry average as we have an advantage cost of capital, and we also expect a better credit performance given our proprietary knowledge of our customer base. Given these dynamics, return on assets will be highly accretive to the company overall.
Lastly, and very importantly, we will maintain a strong bank balance sheet and remain committed to a well-capitalized FDIC designation. In sum, this is a great opportunity and a business profile for investors that will deliver strong financial results over time. Our strategy here is actually quite simple, and it makes both perfect business and economic sense. We're investing in our customers. We're creating more competitive differentiation, improving our value prop, and retention. At the same time, we're driving a higher margin profile for the company overall. Ladies and gentlemen, that's Wheeler Financial. Now let me briefly transition your focus over to shipping, the second area of growth that we're focused on driving for the company. First, I think it's important to take a step back and to look at the progress that we've made over the course of the last year.
We've had nine consecutive quarters of shipping lending growth, proving that we can indeed cross-sell financing into this market segment. We've had over $165 million of shipping credit extended to facilitate shipping logistics volume, and similar to what we see elsewhere in the business, over 85% of the label volume in this business is enabled by GFS today. Although the margin profiles of lending in the shipping market is different than that of the mail market, just given the general larger volumes that shippers send, what is most relevant about these stats is that GFS is a key part of driving the adoption and the acceleration of our shipping strategy across both SMB as well as Commerce Services. The impact that shipping is having on the financial services business is clear when you look at the postage volume financed by GFS today.
Mailing lending volumes have declined in line with the market over the course of the last four years. With the introduction of shipping finance, the aggregate portfolio volume has started to stabilize in 2018 year-over-year, cutting that rate of decline by more than half. Make no mistake about it, financing is a strategic differentiator for Pitney Bowes, but it's also an important enabler for our customers. Let me try to wrap up and pull all of this together for you. Here's what I would hope that you would take back home with you today about Pitney Bowes Financial Services. First, the intensity of focus and the operational execution in our core captive finance business could not be any stronger. We have reduced the rate of decline in our core legacy portfolio, and our current performance is beating the rate of market contraction.
That equates to higher revenues, more earnings per share, and a higher free cash flow. Second, we have a unique set of attributes within financial services, and we're capitalizing on these advantages by entering into high-growth enterprise opportunities, including Wheeler Financial, as well as shipping and logistics finance. Third, financing is driving an important competitive differentiation that is both relevant to our customers and accretive to Pitney Bowes and its shareholders. Lastly, we've done the work to ensure a competitive, but a safe and secure business that will deliver an important annuity income stream that will help to return our external SMB segment back to growth. Our pivot here is well underway, and we're building a profitable growth business here in financial services. Thank you, and let me introduce my good friend and colleague, Bob Guidotti, EVP and President of Software and Data Solutions.
Thanks, Christopher. Good job, bud. Well done. Good morning. Let me add my welcome. One of the things that I want to just point out before I get started here is we actually have changed name here. We're now the Software and Data Solutions organization. It's a little bit of a subtle change because we've always sold data at Pitney Bowes. The difference now is we're putting a lot more focus on it because we've come to realize the great assets that we have, and we've been putting some dollars into it. I'll take you through some of the things that we've done over the past couple of years and the impact it's had in the market and the strategy we have going forward longer term.
This is a chart that I showed, I guess it was 18 months ago or 15 months ago at our last session. We are staying on course in the software business. We're going to continue to leverage the relationship as far as all the information we get from Pitney Bowes, and we do a lot of delivery of packages and of mail, as you've heard. That information provides us a data quality that nobody else has in the industry. More importantly, we're focusing our portfolio. Marc made a comment and showed the charts about going from 5%-20% of new technology over the past few years. Software has now crossed the line. We're getting over 50% of our revenue is on new products that we introduced just a few years ago.
The impact that has is that the headwinds that we are suffering from in previous years are now behind us, and now we have growth opportunity. This is why we think that by focusing in on those core major pieces that we've identified and we've moved our development dollars into and we've trained our sales reps and our partners on, is going to give us that acceleration that we're looking for over the next couple of years. Obviously, we continue to work with our partners. That's a story that we've been on now for over three years. It's really starting to come together, and I'll take you through some of the activities that we have with our partners to demonstrate the growth that we've had. 2018 was a very good year for us.
As I said, we crossed the chasm with our growth products, our strategic products, and the foundational products we've had for many years. You saw that with our second year of revenue growth. You saw an increase in EBIT margins that we've been able to deliver. We've also been able to accomplish some things in the marketplace we didn't see before. We introduced the Software and Data Marketplace, which is one of the key components of our ability now to go out into the data space and be recognized as a leader in this area. You start taking a look at some of the results that we have up here, and I think you'd agree that it was a good year in 2018. We're going to continue to accelerate that in 2019, 2020, and 2020.
We got some aggressive plans, but we feel very confident that we're now on the right path. The marketplace also is a good one. Last year when I showed this chart, it was a $21 billion-$23 billion marketplace. Now, it's up to $23 billion-$25 billion. We're going after about six billion of that. That's determined by the industries that we're focusing in on and the geographies that we're competing in. If you take a look at the underpinnings of that marketplace, the 15%-20% EBIT margins, the growth positions, we're in good position also now to take advantage of those. Of course, we're now putting that data business out there as a billion-dollar business because we really think that we're now much more better positioned to go after that space. These are the major components of what we do.
Customer Information is something that there's a lot of competitors out there in the marketplace. We're not looking to take those people on head-on. The beauty of what we have in our space is it's complementary to what customers are looking for, meaning they've made investments already in Customer Information. What they don't have is that around location. If you think about what we're doing now, people are starting to recognize location is a critical component of everything that they do. They need to make sure that when they talk about their customers and how they relate to each other, that location's a key component of it. When you combine our location intelligence and our Customer Information system, it really provides an advantage that nobody else can offer in the marketplace, and our customers are seeing that.
In fact, what we've done is we've consolidated our architecture under the Spectrum platform to be able to support both of those models. Customers who are looking for the Customer Information Management, or they're looking for location, it's all based on the same platform. As I said, it's complementary to a lot of the technology they have today. We put customer engagement out there also. This absolutely continues to be a critical part of our strategy because it's how we communicate with our customers. This is an area for the past 20, 25 years, Pitney Bowes has been an integral part of our ability to communicate with customers. A lot of that was in the physical world, our ability to do mailing, to be able to put together the information that you receive in your mailbox.
What we've been working on for the last couple of years is a digital strategy through video, through chatbot, and all the other digital technology that our customers are looking for in different ways of communicating with their clients. This is the omni-channel approach. We have now been able to bring together an entire portfolio of products that complements the products that we already have in the marketplace to go out to our existing accounts and offer them new technology to expand the way they communicate with their customers. Finally, you have the standalone data piece. The standalone data piece is something that's very unique to us. It offers us the coverage and the breadth of the types of data that our customers are looking for, and I'll go through that in more detail. What is it about data that makes us a bit unique?
First of all, we cover a large amount of information that comes in. A lot of information on large areas, that's interesting, but it's not that important. What's really interesting now is how we're able to now consolidate that information and start drilling down. If you're interested now in knowing about your customer, it isn't just about that customer, but it's also who are the other customers that you have potential to go sell to. It's their relationship with other people. It's the communities that they're in. It's the associations that they're part of. It's the school districts. It's the properties that they own. It's the businesses that they commute to. All this information now is being consolidated and put into systems that allow our customers now to do a much better evaluation about the marketplaces that they're in and the marketplaces they want to get into.
There's a competitiveness here that is really outstanding from our standpoint because we're offering that unique capability of being able to take data and curate it and do the work that our customers are doing themselves. What do I mean by that? Customers today, and it doesn't matter if you're in the financial industry, the insurance industry, retail, public sector, what you're doing now is you're gathering data from all different sources. You're taking your own data and you're pulling it together, and you're doing analytics on it. Well, here's the challenge. You're doing a lot of that work yourself, and it isn't always accurate. What we have now is the ability to take that data that they're getting, and we are curating that data for them, and we're providing it back to them in a much higher quality and in a format that they're looking for.
This is cutting their expenses and giving them better quality data than they ever had before. We're combining that with our software tools that provide the quality and the location. This is critical to their success because what's happening now is they're able to make decisions faster and better response time. Our ability now to ingest data from over 60 different sources using our tools, ingesting customer data, their data, along with our data, is giving them that difference in margin that they're looking for. We've had some major financial institutions, telco companies, financial institutions, insurance companies rather, who are now standardizing on our technology, leveraging our data to run their businesses because we're giving them that flexibility to ingest their own data. What are we doing?
We're pulling together addressing and enrichment. That now as you take a look at this and you say, "Okay, here's the community. What's really going on in that community?" Being able to go down from a location intelligence standpoint and really pinpointing what you want to be able to do in that location. As an example, where should I put my stores? Where do I put my distribution centers? Where do I put my cell towers for 5G networks? Where do I put ATMs? How do I get myself associated with advertising? This is the information that we're able to pull together for our clients that they don't have any other sources. They have other sources they get it from, but they've got to do it themselves. The other piece of this now is about social.
This is one where we've been working with companies who provide and have a lot of information about social information about people, your LinkedIn, your Facebook, your email addresses. They understand now where that is located. They're now pulling that data into our systems, allowing people now that if they want to communicate, they have a lot more information, not just physically but socially around that individuals. We have to be careful here. This is one of those things where you get a little creepy. There's so much you may want to know.
At the same time, a lot of these are based upon people who have applications who are now leveraging that application and saying, "I'm willing to have you use that information in order for me to understand where you are and communicate with you appropriately." Last time when we were here, we put an app out there that said that if you crossed over and entered the Westin Hotel, if you had the application, it would notify you, and you were getting a message from Pitney Bowes. That's the accuracy of the type of information we have available. Where you cross a boundary with your cell phone, we know that the accuracy at which we have this, that you're now on a property or close to a property, and we can send you an offer, we can send you information that may spark you to take action.
It's pretty powerful stuff. One of the other things that we had, we identified a couple of years ago with our data, it wasn't very consumable. By that I mean we had data, but if you wanted to buy the data, you want to test the data, you want to use the data, you want to get updates, we had literally way too many systems that was supporting that activity. One of the first sales calls I made here was with a large financial institution in New York City, and they said, "We use 84 of your data sets, and if I knew you had other data sets, I'd probably use them, but the thing you have to fix is how you send your updates out." We literally shifted a couple of million dollars of development dollars out of one area that wasn't growing into this space.
Last year, we launched the software data marketplace. It really is a data marketplace right now that allows us and customers to come in and sample the data sets that we have. I encourage all of you, please go online. Take a look at this. Information about school districts, real estate, all the type of information that as a business you want to start downloading and start playing with, we now have that capability to show it to you. The results of that have been we've identified over $20 million in business opportunities. We've closed over $5 million, and we now have thousands of customers who are entering our site and getting better awareness over what we can do at Pitney Bowes. They're asking for data. As part of that strategy, we're also letting them know about the software we have.
It really has been able to allow us to expand our brand presence, understanding what the customers are looking for because we are actually keeping track of every single customer that comes in. We understand the downloads that they're looking for, we start making recommendations back to them. I understand you downloaded this. Would you be interested in this? We're actually now starting to be able to do transactions automatically, do it right through the system, through credit cards and other transactions. We feel this is a really great opportunity for us for a couple of reasons. One, it drives revenue, drives awareness, as I said, we start expanding that population. Our partners are also very interested in this space. If you're a partner, one of the things that you've been doing for years is selling software.
What you haven't been doing is taking data and including it as part of your offering. The partners are now starting to customize and put together their offerings on our marketplace and allowing the customers to download and get the data directly from them. Now, our partner channel, as we have stated before, is really critical to the future growth of Software and Data. The reality is I have a great direct sales force. They are outstanding. They know their clients, they know their industries, but we're limited to the spaces that we're currently in. What our partners are enabling us to do is enter new markets. The other piece that you'll find is that the technology that we're talking about is complementary to a lot of other technology. We're in the location business, we're in the addressing, we're in data quality.
That in itself is not a solution by itself. It's when you combine it with other things that you get real value. Large technology companies are used to doing that. They're used to taking lots of different technology, combining it together. Partners do the same thing. What they're doing now is they're looking at our technology and saying, "We can take your location information, your CIM data, your CES product, your data itself. We are combining that with other offerings that we have and selling those into the marketplace." They're going after industries that we weren't part of before. In fact, what we're doing now is working with them in these swim lanes. We have over 14 different swim lanes. By that we mean these are partners that we've identified that we're working with for them to develop their solutions in marketplaces that are unique to them.
Example is higher education. We are not in the higher education market. That's not where I've deployed the direct sales team. I've got two partners out there that spend a lot of their time with higher education. Think about location in higher ed. If you're recruiting students, you want to understand the school district, you understand the tax base, you understand previous scores, property values, you want to appeal your school to those students. You want to know what school districts they are. You want to start collecting data on where they've gone to colleges before and start accumulating that data and customizing your message directly to those students. Our partners do that for us. We don't have to do that ourselves because we don't have that knowledge, we don't have that institutional capability, and we haven't been doing it for years. They have.
Just an example of how by leveraging the partner community, we're getting into markets and getting opportunities we did not have before. This gets back to the lift idea. You'll hear us talk about lift. When you're building a channel, obviously the first thing you have to do is you have to identify these folks. You have to bring them on board, you have to educate them on your product, which is something we've been doing for years, then you have to bring them into your opportunities. You work side by side with them in the beginning because they want to get a better understanding about how your technology works. They want to understand and get comfortable with that relationship. What then happens is they start going out on their own, that's what we refer to as lift.
That's when they start bringing us into deals or they start executing deals on their own. That's a tremendous advantage to us because now the sales organization is focused on their territory. They're assisting the partners in what they're working on, also we end up getting some revenue we hadn't even counted on before. That is what the payoff is in 2019 and the work that we've been doing for the last three years, that's why we think that we have a really good program and one that's going to be accelerating. The other piece on the partner program is we are expanding it out to more ISVs, people who are developing their own software in the marketplace and using our technology underneath the covers.
We're seeing a great uplift right now in awareness of people coming to us and asking, "How do we get your technology into our solutions?" That's all positive. Some of the results of what we've been doing, we measure this thing every month. We measure how much pipeline they've created, how much pipeline they're involved in, transaction sales. One of the encouraging numbers that you'll hear us talk about is small deal volume. That's been going up now six quarters in a row. A lot of that has to do with the fact that we have partners out there who are generating these transactions. They're out there building up the base of customers that we're working with. We don't go into software and sell million-dollar deals. We'd like you to, it doesn't quite work that way. You have to build that install base up.
We've been doing a lot of work with them tracking very good revenue progress, we're being recognized in the industry also. These are programs now that get monitored, they get reported on. The reason why this is important, because if you're a partner and we approach you and we say, "We want you to become part of our program," they will look to say, "How good is your program?" We point to these things, we get instant recognition. Partners are always concerned about how they're being treated by their software partners, we have a reputation on the marketplace as some of the best programs in the world. What are the key takeaways for this part? Two-year consecutive growth.
More importantly, we've now crossed that line that says we're getting more of our revenue from new technology versus the older technology that we've been selling into the marketplace for years. This was a strategic decision to fund certain development efforts, decelerate others, actually increasing the profit on the picture. That vertical focus is critical to us. In the past, we were too broad. We were trying to sell into too many markets, too many different solutions, it was not being effective. We are now going into certain industries telling that story about what we have the capability of doing. One of the charts we used to show is that we had 24 of the top 25 insurance industries, agencies, carriers in the U.S. We're now 25 out of 25.
That's the focus we have. Finally, sustaining the momentum in the data and the channel is key. These are the product stuff that we have to go work on. We have got to continue making sure that our data is high quality and what our clients are looking for. There's tremendous upside here. As we start having conversations with our partners around data and our customers about data, it's becoming more and more relevant. This is what they're after, because it complements our software sales. Finally, making sure that partner program continues to grow, continues to provide us the lift, and the leads and the closes that we're looking for. This has got a major component of our overall strategy as we continue to grow. That's the software positioning.
You'll see that we've done some new things, but we're on the path right now to maintain that position that we're currently in and just go faster. It's all about speed right now. With that, I'd like to bring up our revenue queen, Lila Snyder. Is that a new title we're going to give you now?
Thank you.
You bet.
All right. We can always count on Bob for a colorful introduction. When Jason said something nice about Christopher, Bob leaned over and said, "Don't expect that from me." We're in the home stretch toward the break, I will try to get you there efficiently. I'm excited to talk to you about Commerce Services. I feel like we were just here, a little over a year ago, talking about Commerce Services and Pitney Bowes writ large, and things continue to change rapidly in our world, and I'm excited to tell you where we're headed. Two topics only for today, and I think the second one you'll all be excited about, because I've gotten this question probably from every single one of you over the years, and I've avoided it artfully, I feel like. Today, we'll finally answer the question of when will Global Ecommerce be profitable.
The answer is 2020. I'm going to make you wait just a little bit longer to tell you how that comes about. First, I want to talk about how we're continuing to win in attractive markets. Fundamentally, Commerce Services is full of platform businesses. Platform businesses only work when they have scale. You have to get them to scale, and the only way to get them there is to continually bring on more clients and add more volume to those platforms to get them to profitability. We can't get to profitability without continued growth and continued success with clients. I want to start there, then we'll move to the question on profitability. We operate today, in Commerce Services, what we would describe as four core platforms that make up the business. The first is Presort Services.
We'll talk about it more in a minute, but the industry leader in presorting mail, already a scale business and one that we're using as a blueprint for how we're growing our profitability in Global Ecommerce. The last three platforms are all rolled up into Global Ecommerce. They are all, by definition, shipping businesses targeting e-commerce players, whether those be merchants, retailers, marketplaces, or partners who help us access those markets. We're operating three distinct platforms in that business. The first one is cross-border solutions. This is our ability to reach consumers around the world and help retailers and marketplaces efficiently and simply reach those consumers. The second is shipping solutions. This is our technology assets around label creation and tracking, primarily. Accessing the USPS, for sure, as our largest partner, but many other carriers and capabilities as well.
Our domestic parcel business, which is both deliveries and returns. It's our ability to reach every household in the U.S. to either get a return back from that consumer to a retailer or get a delivery from a retailer to that consumer. Within that domestic parcel business, we also operate a fulfillment business. We think about fulfillment as an enabler for the domestic parcel platform. We're in the fulfillment business to feed volume into that domestic parcel platform, which is why you don't see it here on the list. I want to distinguish those three shipping businesses that make up Global Ecommerce from what Jason talked about just a few minutes ago, just to help you be clear about how we think about the shipping market, which is broad, and how we work together across SMB and Commerce Services to serve it.
In those three markets I just described, those three platforms, think of those as high-volume shippers predominantly, meaning their core business involves shipping something. It is the business that they get done, and they do that in the hundreds, thousands, tens of thousands or more on a daily basis. We're focused on high-volume shippers, largely, in my world, in the e-commerce space. We're targeting merchants, marketplaces, and anyone who's shipping in an e-commerce environment. To contrast that, what Jason described when he talked about his market for shipping, it's very much about the office space. Think about any business that is operating as shipping every day, but shipping is not a core part of their business, and lower volume shippers. While Jason may have high volume office shippers, they tend to be fragmented across many locations.
What they're shipping from any one given location is a relatively low volume. Similarly, Jason has many small retailers as part of his opportunity set and his client base, but they're shipping low volumes of parcels. The retailers and merchants that we're serving in the Global Ecommerce business are larger, and they're in the hundreds, thousands, tens of thousands in terms of their daily volumes. Just a way to think about how we work across the businesses on shipping to cover the whole market. As Jason said, and I'll reiterate, we're using the same technology platform to do that.
What underlies all of those businesses is a common technology platform that allows us to do label creation, carrier compliance, tracking one way that supports all of the SendPro assets that Jason described and all of the things I'll talk about as part of Global Ecommerce. We're participating in attractive markets across both parts of Commerce Services. For Presort's a $3 billion-$4 billion market, not growing, flat to -2%. It's declining. It is a mailing business predominantly, although increasingly we're starting to grow in a space we call bound and packet mail. Think of that as things that come in flats, large thick envelopes, anything that you would describe as a packet versus a box. Bound and packet mail, we're seeing more and more opportunity for that in both the traditional Presort client base as well as the e-commerce client base.
Still, overall, Presort, predominantly a mailing business that is in decline at flat to -2% and has a long-term EBIT margin that we've talked about consistently at 15% or greater. On the Global Ecommerce side, today we size the business at $40 billion-$44 billion across the world, and this is more than double what we would've talked about last year at this time. The reason for that is our capabilities continue to expand, and as they do, we re-look at the markets we're participating in, and as you would expect, as we expand our capabilities, the market that is open to us and that we can go after is expanding as well. We now see our market space as $40 billion-$44 billion, growing at 12%-14%, sort of in that sweet spot of where we see e-commerce growing on a global basis.
Obviously, our share of that market is relatively low, and we see that as exciting. We have a lot of room to grow with the capabilities that we have in this attractive space. While we certainly expect to grow at the market growth rate, we have aspirations to grow faster than that, given our ability to take share. The long-term EBIT margins we see in this business are in the 8%-12% range. Again, this is changing a little bit as we continue to expand our capabilities and as the mix of our business changes. I'll talk more about that later. Global Ecommerce is a constellation of platforms. Each one of those platforms has a slightly different profit profile. Margins on returns are different than margins on deliveries, are different than margins on cross-border.
As we balance the market and our participation in these markets, we see that EBIT margin, that target EBIT margin, moving around a little bit as well, but still a healthy and attractive EBIT margin at 8%-12%. I'm going to talk about both of these. I'll spend most of my time on Global Ecommerce, but I do want to touch on Presort, briefly, building a little bit on what Marc talked about earlier. Presort Services, by any definition, has an incredibly strong track record. Just to level set and remind us of the quality of work that that team has been doing for years, we've been delivering above industry margins. If you look at the last five years, four out of the five years we were above that 15% EBIT margin target that we just talked about for the market.
The only exception was 2018, where we were just below at 14.3%. We anticipate getting back to those, and I'll talk about how we're going to do that in just a second. The second point, I think, is incredibly important. This is a declining market. It is a mailing business, and yet Presort has continued to grow in the face of that. Five consecutive years in a row, for the last five years, Presort has delivered positive growth in a declining market with a CAGR of almost 4%. It's incredibly impressive to think about. It's not a fast-growing business, but it is certainly outperforming its market by a material margin and continues to do so. Part of the reason that Presort has been able to do that so consistently is the next point about best-in-class client satisfaction.
When you look at Net Promoter Score and you look at what is defined as world-class, since we began measuring Net Promoter Score, Presort has been above that world-class benchmark every year consistently and has improved every year we've measured it. It's an incredible statistic. The relationships that the Presort team has with their clients are unparalleled, and that has helped us sustain that growth, and it will also help us continue to grow and deliver the margins above the industry rate. Finally, we're the largest Workshare partner of the USPS, and that's important because in a scale business, you want a lot of volume. Last year, we processed over 16 billion pieces of letter mail. That represents more than 10% of the total mail processed by the Postal Service and more than 25% of the First-Class Mail.
If you think about the volume of mail that is coming through our environments across our 38 operating centers within Presort, we play a significant role for the Postal Service in making sure that mail gets to you when it's supposed to and is effective in doing so, and we're very proud of that. Presort has been and continues to be a very strong business for us. Obviously, Q1 was not what we anticipated or what we expect from this business, and we have a program underway within Presort to address that. As Marc said, we've been at this for far longer than just a few months. We started working on this in 2018. We saw that we were going to come in just below that industry, 15% last year from an EBIT perspective, and we began to build a transformation plan around four key areas.
I think that the consistent theme across the four is that this is about data-driven decision-making. What has changed in our Presort business over the last few years is the access to data and the amount of data and our capacity to do something with that data to improve our operations. We've built this on four pillars of activity. The first one is around standardizing the operating model. As we've grown and as we've expanded to 38 operating centers, two things have happened. We've had proliferation of the ways we do things, so lots of different ways to do activities. At the same time. The market has moved. Compliance standards have changed. Technology has changed.
This is all about modernizing and standardizing our processes, making sure that we have new processes to deal with new regulations, new technology, et cetera, and that we're doing those consistently. Think of this as doing dispatch with less labor, thinking about quality control differently and managing that more efficiently. That's on the operating model. The second one is staffing according to mail volume, which seems like an obvious thing to do, and we've always staffed according to mail volume. What we're able to do now is do this much more precisely with predictive analytics that allows us to take labor costs out in each of those operating centers, and we're focused on optimizing that labor. Third is our transportation network.
Again, better technology, better data, better tools is allowing us to optimize the routing of the trucks as we pick up mail from our clients and partners and bring that back to our facilities. We find a lot of efficiency opportunity there. Finally, we're focused on aligning price to value. As we continue to grow, as we continue to invest, as we continue to gain strength in the market, we want to make sure that we're aligning the price that we're charging with the value that we're delivering. We're spending a lot of time on pricing across the board, and those improvements are starting to roll out now. As we look at this transformation, it's a very organized, disciplined process as you would expect from a business like Presort.
We expect the majority of the benefits to start to accrue as we get into the latter half of the year. We think this is going to continue through 2020 as we continue to revitalize the profitability of Presort Services. Okay, let me turn to Global Ecommerce. We continue to fuel the growth for Pitney Bowes. You saw that a bit from Marc, you'll see it more from Stan later on. Three points I think are important to make here. We continue to deliver above-industry growth rates pretty consistently. We continue to build our scale, so processing now over 125 million physical parcels and over 400 million digital parcels. The importance of the digital parcels is those are all running through our digital shipping platform and producing a lot of data that we're starting to use as we build new products and services.
If you look at the trajectory over the last few years, we've added over $1 billion of revenue, from a $15 million business in 2012 to over $1 billion in Global Ecommerce in 2018. What's at the heart of that? Our clients. This would've been a very lonely chart four years ago. Four years ago today, we would've had one name on this chart. Today, there are over 800 clients, this is just a sampling of them. You can see they span large marketplaces, large retailers, small retailers you've probably never heard of, international merchants, international 3PLs, all of whom are accessing our Global Ecommerce platforms, we're excited about them. If you think about the growth of our client base, I think one of the things we're most excited about is we've really accelerated the pace of our go-to-market.
We've brought it together, we've unified it across Global Ecommerce. We have a single sales organization, a single client success organization, a single support organization. Everything that we do that's touching these clients is now done by a single team. We've invested in that team, we're now starting to see some pretty incredible momentum in the market. If you look at the last 12 months, think about the size and scale of this business, just over 800 clients. In the last 12 months, we've added 250 clients and partners. The growth in our client base is accelerating dramatically, we believe it is because of two things. One is the services are resonating in the market. We have things that clients want to buy, which is great.
Two is the unification of our go-to-market is allowing us to do a better job at things like cross-selling into the base, selling into our existing clients more products and services. Importantly, when we go to new clients and we bring on the 250 clients that we anticipate adding over the next 12 months, we're not just selling them one thing, we're selling them multiple things. We're bundling in a much more effective way because of the way we're organized. We're also making significant investments in our client experience. The reason why that's important is because in a volume-based, scale-based business, churn can kill your path to both growth and profitability.
We have been making real purposeful investments in the client experience around tracking, the speed of our network, both the speed in which we get the returns back in and therefore get the money back to the consumer, as well as the speed to deliver parcels on the outbound. We've invested in our back office and in our invoicing. As an example, our Borderfree invoices, we'll revitalize and we'll roll out in the next month a completely new invoicing approach in Borderfree. The invoices we send today are essentially done on Excel spreadsheet, and each one is unique and individual. The investments we're making to automate and improve our back office are going to have direct impacts on our clients. We've invested a lot in our client support organization, to make sure that when clients have issues, we're there for them in an effective way.
Those investments are paying off. If you think about our churn rate, this year-to-date, it's low single digits, very low single digits. We don't think that's an accident. We think that is directly tied to the investments that we've been making. Why do we win with clients? I put this in here because we are competing against many giants, and it's important to know that we're not trying to win everywhere, and we're not trying to win at their game. We're trying to win in niches, and segments, and capabilities where we have a unique capability to win, and we're also approaching the market in a different way. Those two things we think are really helping us win with clients. There are three aspects of it that I wanted to touch on.
The first is that we're building our services purpose-built for consumers and e-commerce. It's really important. Consumers are getting more and more demanding every year. I'll give you a few examples in a few minutes. Competitors were not built for that. They built their networks, they built their services, they built their capabilities for a different world. They're retrofitting e-commerce into it. Pitney Bowes has the advantage that we built our network for e-commerce. It gives us more flexibility to handle the unique demands of e-commerce. We think that that helps us win today, and increasingly, that focus on the consumer will help us win going forward.
The second one is that we make our client's brand the hero. That may sound like a small difference, but retailers are competing against Amazon, and the one thing that they have, the one differentiator they have, is their brand. Many of our competitors have decided they too want a consumer brand. They fight for control over the experience with the retailer or the merchant. We have no interest in having a consumer brand. We're in business to make our clients successful. We want to make their brands the hero, and we do that in any number of ways every single day. Custom packaging in our fulfillment business. You'll never get a box that's branded Pitney Bowes. That's different than others in our space. Branded tracking.
When you come to track, I'll show you the example in a second, we want that to be an experience with the retailer that you bought something from, not with your carrier. Your carrier shouldn't be the interface. We think that's important. We've always done retailer-specific demand generation, marketing on behalf of our retailers in our cross-border space. We have over 1 million global consumers who have accounts with us that we use directly to market our retailers' brands. These are important examples of making the client's brand the hero. This matters a lot to retailers, this resonates almost more than anything else when we have conversations with them. Finally, we are at our core a technology company, we use technology and increasingly data science to solve problems in a different way than our competitors.
I'll give you an example because this one's a little bit hard to think about. Last year, we had an issue in our cross-border business. We need to know country of origin. When you're shipping across borders, you have to be able to declare the country of origin. It seems like a simple thing, but when you're serving retailers that don't have, or marketplaces, that don't have great data about their products, often we don't get the country of origin. What do you have to do? You have to open up the box, you have to look at it, you have to figure out the country of origin, you have to enter it in, and off it goes. You can imagine that's an expensive process.
Most logistics competitors would've looked at that process, they would've brought in a Lean Six Sigma continuous improvement expert, they would've got out stopwatches, they would've figured out how to do it. What we did is we stepped back and said, "We've shipped millions of these things over time. We have a great set of data. We use data science to solve the problem." We used our machine learning and our AI capabilities. We can now predict with a level of accuracy the country of origin that allows us to not open a box. We cut the processing from open box to closed box, which is a lot cheaper dramatically, without thinking about continuous improvement and without stopwatches, but using data and data science.
It's just one small example of how we can improve the speed at which parcels move through our network and the cost of processing them using a very different way of thinking about problems. We think this really differentiates us, in our client conversations, they tend to agree. I wanted to give you just a few quick examples of what we're up to. Consumer Connect, something we announced and launched just a few weeks ago, this is a great demonstration of those three differentiators. Recognizes the importance of the consumer, puts the retailer's brand first, and is a really slick technology solution. Essentially, this is the place you go to track your packages with a retailer that works with Pitney Bowes in the go-forward scenario. Consumers are highly engaged in the tracking experience. We have billions of tracking records.
We know how often people track. People track a parcel eight times on average before it reaches them. Think about from when you hit the buy button to when it lands on your doorstep, on average, a U.S. consumer will track eight times. I see you shaking your heads, many of you. I've never tracked a package eight times. I'm a one or two times tracker, but I have a teenage daughter, and I've observed her in the wild, and she counterbalances my one to two with 18-20, and that's how you get to eight. Okay? It seems unbelievable, but it's right there in the data. If consumers are really engaged in the tracking experience, if you're a retailer, you don't want your tracking experience branded by the carrier. That makes no sense, right?
You want that to be an engaged experience between your consumer and your brand, we've created Consumer Connect to do that. It allows you to use social media, cross-selling links. It allows you to sell them new things, teach them more about your brand, create an experience both on the delivery and the return that is branded and is engaging and is deepening the relationship between you as the retailer and your consumer. The other thing about this, which is the technology that's important, is it's a self-configuration tool. If you can send an email, and every retailer, no matter how big or small they are, can send a marketing email, you can configure this every day to look and feel different. New pictures, new colors, new branding, special for a holiday, special for a sale, whatever you want to do. You can change it every single day.
We think this is a great differentiator and a great example of where we're going, we just launched this in the market, as I said, a few weeks ago. The next one I want to talk about is three-day guaranteed delivery in the U.S. This is a new product service we have in beta testing, we're extremely excited about it. The concept here is simple. What you see in the chart is that when you ask consumers, again, we're going to start with the consumer. When you ask consumers if shipping is free, what is an acceptable time to receive that package, and what's fast and what's slow? What consumers will largely say is, "I prefer two days or less, but three to four days is still acceptable." Now, that's getting faster.
I expect when we do the survey again this year, that line is going to shift to the left. We know we've got to get faster. Our network, our standard delivery offering is a five-day service. We need to move that to be a three-day service. We're investing in two things. We're investing in the network for sure, we continue to expand the number of locations where we're sorting parcels, which allows us to get closer to the consumer. At the same time, we're starting with data, just like I talked about before in the example that I used. We're using those billions of tracking records.
We can tell you with a high degree of accuracy, how long it takes to deliver a parcel from every origin zip to every destination zip code in the U.S., across multiple ways of transportation, whether that's through our own network, whether that's through the United States Postal Service in a different way, like a Priority Mail or a first-class mail. We're using that and connecting it with a decisioning engine that we've built that allows us to select the lowest cost way to get something from a particular origin destination to your house. We can do that guaranteed, because we know with such a high degree of accuracy when it will arrive. Not only will we say it's a three-day service, we will guarantee it's a three-day service. If it doesn't get there in three days, we refund the shipping.
We think this is a win-win, both the speed, three days, because it fits with what the consumer wants. The guarantee becomes really important for the retailer as part of their consumer promise. It's now a marketing tool. I'm guaranteeing it in three days. I can market that. It helps their conversion rate. We're in beta testing with a few of our fulfillment clients at the moment on this service, it's going extremely well. This is something we won't roll out full scale until 2020, we will be ready to hit the ground running. We're really excited about what this has to offer for us going forward. I'll touch briefly on the technology platform, which is our Shipping API platform. You probably remember, or you might remember seeing this version of this last year.
We continue to expand the services that are available to our clients through a single technology platform, which we call our Shipping API. This is much more than what our competitors are doing. We're not allowing access to a single service. We're allowing access to an ever-expanding list of services that span domestic and cross-border, that are postal and multi-carrier, that provide access to the financial services that Chris talked about before, which 85% of our shipping clients take advantage of through a single technology interface. This is incredibly important as we think about the cross-selling I mentioned before. Once I have a client that's connected to, let's say, USPS label creation, if they're interested in our own domestic parcel network, Newgistics, we can now put them directly into that through the integration that they've already done with our Shipping API platform.
It's a really exciting example of using technology to accelerate our progress in the market. Last one I'll highlight is international inbound to the U.S. We think of ourselves as cross-border, historically, cross-border has been primarily U.S. to the world. What we're doing now is we're turning that capability around. We recognize that with our shipping technology capabilities, you access this through that Shipping API. With our cross-border know-how, we know how to cross borders, we know about customs, we understand the regulatory environment, and access to our domestic parcel network, we've created a very innovative solution to get from everywhere to the U.S. consumer. We've started with China and the U.K., and we're seeing a tremendous amount of growth, particularly as we focus on what consumers want.
This needs to speed up as well, we can provide a faster access to the U.S. consumer than many of the other alternatives that these shippers, marketplaces, retailers have at their disposal today. We're excited about where this is going. This is a big part of fueling our growth in 2019 and beyond. Again, I think the important thing is, this is something we wouldn't have been able to do a year ago or a year before that, because it really requires the fulsome capabilities across the three different platforms of Global Ecommerce to bring it to life. Okay. Just to recap that. Attractive markets, consistent track record of winning with clients, continuing to innovate around the consumer, putting the client's brand first, and around being technology and data science led. We're both investing in Presort and the transformation.
We expect that to get back to above-market margins. We're excited about where that's going. We also expect Presort to continue to grow in a declining market, which is terrific. On the Global Ecommerce side, we think that what we're bringing to market now in line with our differentiators and in line with the very productive conversations we're having with clients, we will continue to outpace market growth in Global Ecommerce. Let's talk about profitability. I'm going to come back to this notion of platform businesses. I've made the point before, these are platform businesses, four of them, Presort, Cross Border, Shipping, Domestic Parcel. If you think about platform businesses, there's a lot written about platform businesses, this is a simplification of that, but in general, platform businesses have this type of profitability curve, typically.
You invest a lot upfront to build the platform, you invest a lot to acquire clients to build scale, at some point, you build sufficient scale that you cross over that profitability line. You can now support both the ongoing maintenance of that platform you built, as well as the depreciation of the asset and the amortization of that asset that you've built. Once you cross over that profitability curve, as you continue to build scale, you will eventually reach the amount of scale that's required to level off that profitability at a very attractive long-term rate. This is how it works. We're lucky at Pitney Bowes and within Commerce Services, we have one of these that's at the happy end of this curve, which is Presort Services. Presort has reached scale long ago.
I mentioned before the profitability we've seen over the last several years and continue to see 16.6 billion pieces of letter mail. This is a scale business. It performs well. It has great margins. This is what we aspire Global Ecommerce will be as we build that scale. When we look at Presort Services, we think about how did this happen, right? It's pretty straightforward, but not easy to do. Essentially, Presort Services built scale. They went from 12 operating centers to 38. We currently have 14 operating centers in our Global Ecommerce business domestically. Think about the parallels. Mail volumes increased by, I don't know, I can't even do that math, but a lot, 2.5 billion to over 16 billion.
That is an incredible trajectory of growth in volume that led to the scale economics that we're benefiting from today that you can see here. How did they do it? We're following this exact same formula in Global Ecommerce. You have to expand the network, right? You can't handle more volume in the same facilities you have. We've increased the number of facilities already in our domestic parcel business since we made the acquisition of Newgistics with five new facilities in 18 months. We will continue to do that throughout 2019 and beyond. Volume growth. It is so important. You cannot get to profitability or at least not long-term sustainable profitability without scale, and you need the volume to get to scale. Client experience focus. I talked about this a bit already. You cannot afford, on the journey to scale, to have a lot of churn.
It is too hard to acquire clients and to acquire that volume to let it leak out the bottom. You have to hold on to the clients and the volume, and the only way you can do that is with an outstanding client experience, which Presort has certainly delivered, and I feel like we're on a great path to doing in the Global Ecommerce business. Operational excellence, because scale is great, but scale alone is not enough. You have to operate efficiently, and you have to constantly focus on the improvement of your operations. I think what we're doing today in the Presort transformation is a great example of that. You have to continuously think about how do we improve the operational excellence, because just because you have the scale is not a guarantee of the margins. You have to continuously get better.
This exact formula is what we're focused on in Global Ecommerce, and you can see when we've been talking about the investments that we've been making, the things that we're doing, the services that we're putting forward in the market, it is around this basic formula. Where are we today? Global Ecommerce is progressing along the maturity curve. We are importantly not below the double pink line. We're in between the two, which I realize is not as satisfying as you might like. We are EBITDA positive, not yet EBIT positive. If you look at 2018, -3% EBIT margin, but a positive +3% EBITDA margin. We are marching along the curve. We have more investments to make, but we continue to march along the curve.
What I thought I would do, and we don't have time to do all of them, I thought I would give you more insight into the economics of these businesses and why scale and efficiency are so important. Because understanding what drives the cost helps you get your head around the path to profitability and how we get from here to there. I'm going to focus for the purposes of this example on domestic parcel. This is our Newgistics business, less the fulfillment. This is the returns and the deliveries business. All of the domestic parcels that go through our network are in here. We manage this on a unit economic basis. We manage the other platforms within Commerce Services on a unit economic basis. It's the easiest way to manage the business day to day.
Let me just outline first what the costs are that are in here. The first piece is postal. It's the largest component of our cost. It's over half of the cost in our domestic parcel business, and this is what we partner with the United States Postal Service on for last mile delivery of parcels and the first mile, if you will, pickup of returns. When you leave that return on your doorstep and your mailman comes by and picks it up, that's what we're paying for in this cost. It is incredibly cost efficient. It is more than half of our cost, but we could never replicate this on our own. This is why we love the Postal Service. They have a highly scaled network of their own for delivering last mile parcels.
We leverage that through our partnership with them, this allows us to reach the consumer in an efficient way, even though we're not yet at scale. There are ways to improve this as we get greater scale. I'll give you a couple of examples. We deliver parcels to DDUs. DDUs are essentially your local post office. We hand it off to the Postal Service, and they bring it to your house. Excuse me. In some cases, we don't have enough volume to economically get to your post office, we go one step further up in the USPS network, and we pay them more for that because they're doing more of the transportation and more of the work. The more volume we get, the more we can go to those endpoints, those DDUs. That helps us lower our postal costs over time.
We've seen that happen in our network as we've built more scale over the last 12 months. That will continue. This cost can go down some, but there's a limit, right? This is based on the Postal Service economics, there's a limit to how much you can take out of this. We have more room to go as we scale the business on this piece of the cost. Importantly, this is probably, although it's more than half of our cost, this is the reason we can compete with the big guys, because we have an efficient way to reach the household of every consumer in the United States. Second component of cost, I would just put in a bucket called operating cost. There are three big things in there.
The warehouse costs, think of this as all the labor that's required to sort those parcels and move those parcels around. Transportation, right? We've got to move parcels between our retailers and our facilities, intra-facility, and between our facilities to those DDUs or post offices. It is an incredibly large portion of our cost, we manage our transportation closely. You've got just, it says G&A, should be SG&A. This is all of our selling expense, our go to market, our G&A, and our technology spend. Some of it, the maintenance of our platforms, fits in this G&A bucket. This is a place where we don't necessarily need scale to get better. Operating efficiency, operating excellence can help us here. Things like automation, we're investing in automation to reduce our labor costs.
We're focusing on integration between Presort and our domestic parcel network, which is allowing us to put mail and parcels on the same trucks. Full trucks cost less than half empty trucks, putting twice as much stuff on the same truck is highly beneficial for our economics. That integration synergy, we're still reaping the benefits of. Continuous improvement. Same thing we talked about in the Presort transformation, maturing and standardizing our processes here. This is a startup that is continuing to mature, and every day we're focused on what can we do better, how can we standardize it, how can we make it the same across our 14 operating centers, and how do we make that go faster and more efficiently over time? The client experience. As we make the client experience better, the investments we already talked about, that helps us lower our costs.
As our tracking gets better, we get less calls into our client support. As our invoicing gets better, we have less manual operations on the back end, and we get our cash faster because the invoices make sense. We're making a lot of investments to lower operating costs at our current scale, 110 million domestic parcels in 2018. We can lower this bucket of cost at that level of scale. Scale does have the biggest impact, and the reason it does is about capacity utilization. Full trucks, full buildings, scaling the G&A over a larger base. All of that helps our unit economics. We continue to focus on getting to the scale, the sufficient scale we need to get to profitability and beyond. Finally, investments. It's actually the lowest portion of our cost. It's the one we tend to talk about the most.
Represents less than 10% of the cost in this domestic parcel business. It's balanced across growth initiatives, things we're investing in from a technology standpoint and an infrastructure standpoint to support growth, but also efficiency. All of those things I just described around lowering our operating costs from efficiency require investments in technology, in people, et cetera. There's a balance here across both growth and efficiency, and while we expect over time you get more parcels, you spread this out, we still have a lot of investment in front of us, partially because we're so excited about the growth opportunities, and partially because this business has more time in front of it to mature. We don't expect the investment percentage to reduce that much. Again, it's the smallest portion of the cost.
If you look at this in total and you start to think about how does this evolve with time and scale, that's the exact chart you just saw, right? We talked about before, we were at +3% EBITDA margin, -3% on an EBIT basis. We make the efficiency improvements, we continue to get scale benefits, and over time, this lands at roughly a 10% EBIT margin in that range of 8%-12% that we talked about earlier for the market with a give or take 15% EBITDA margin. What does scale mean? The way we think about our cost structure is we think we need to get to 250 million domestic parcels to be at scale. At those long-term margins.
Based on our growth rates, our projections, where we think we're going, we believe we will exit 2022 at scale, and therefore in this range from a margin perspective, exiting 2022. If you looked at the same exercise for cross-border or shipping, and even if you broke domestic parcel down into returns and deliveries, you would see slightly different dynamics. You'd see different initiatives, different things we're doing. The general scope of this is the same. We're focused on efficiency improvements, and we're focused on scale. Those two things will lead us to that long-term profitability that we need. That's where we were in 2018, between the two pink lines. 2020 will be above that EBIT breakeven line.
That's a really important and profound thing for us to say today, because we believe we have set the foundation to deliver the scale and the growth and the efficiency improvements that will allow us to move this business to be EBIT profitable as Global Ecommerce. I will remind you of something I said before, which is that Global Ecommerce number is a blend across the platforms. The different services that we offer within Global Ecommerce have different profit margins. Not wildly different, but different enough that we're managing, and we need to manage closely the growth rates to make sure we continue to grow not just deliveries, but also returns, not just cross-border, but also shipping. We've got to progress so that the mix of this business continues to deliver the profitability that we're expecting.
We feel excited about and confident about telling you today that we'll be profitable in 2020. That said, we are going to continue to invest for the long term, that investment line will continue to be there. Let me just summarize. We continue to win in attractive markets. I hope I've made a compelling case for that. Presort will get back to above-market margins. We're executing on a detailed plan. We're focused on the right areas, and you'll see the benefits of that starting to come through in the remainder of 2019. Global Ecommerce is winning in the market. What we are selling, what we are doing, the services we're providing, are resonating with clients. We are accelerating our client acquisition. 250 new clients in the last 12 months is an amazing number for us.
It's not just the clients we're bringing on, but it's the partners that we're bringing on that give us access to a whole host of other merchants and retailers and ecommerce providers that we wouldn't be able to reach on our own. Similar to Bob, we're focused not just on a direct sales model, but selling very effectively into partners who access this market in a different way. We're innovating in the places that resonate with the market. We're innovating around consumers and what consumers want and what consumers expect. When consumers are happy, retailers and merchants and shippers are happy as well. We're putting our clients' brands first. We're making sure that the client's brand is the hero, that we're strengthening their relationship with their consumer. We're strengthening their Net Promoter Score by the services that we're providing for them and on their behalf.
We will continue to innovate around technology and the use of data science to stay one or two steps ahead of our competitors, thinking about old problems and new ones in a different way. We believe our growth will continue to outpace the market. We have consistently shown the ability to do that. We don't see that stopping anytime soon. At the same time, we will be profitable in 2020. We're putting a stake in the ground. We feel confident about it, and the reason that I feel so confident about it is I know what we're doing from an efficiency standpoint. I know that that is helping move us in the right direction, and the volume growth that we need to get above that profitability line is in our sights. We'll continue to win with clients, which will lead to more volume, which leads to profitability. Thank you.
Ladies and gentlemen, we will now take a 10-minute break. Please be back in your seats in 10 minutes and we'll continue. Thank you.
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Ladies and gentlemen, we'll begin again in five minutes. Please begin to take your seats. We'll begin in five minutes. Thank you.
You have never failed me, no. All I wanna do is just love you, baby. I wanna hug you and kiss you, baby, right now. Your love's so sweet. Please don't you make me wait. All I wanna do is just love you, baby. I wanna hug you and kiss you, baby, right now. Your love's so good. Please don't you make me wait. There's never, ever been any doubt. That you want for me in every way. Babe, you make my love shine. So glad you chose to be mine. I just want to show you. I feel the same for you, baby. All I wanna do is just love you, baby. I wanna hug you and kiss you, baby, right now. Your love's so good. Oh, baby. All I wanna do is just love you, baby. I wanna love you, baby.
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Ladies and gentlemen, we'd like to get started again. If we can take our seats, please, we'd like to get started as soon as possible. Thank you.
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Ladies and gentlemen, welcome back. Please welcome Stanley Sutula, Executive Vice President and Chief Financial Officer.
Thank you for coming back. This morning, you have heard from all of our senior leaders about the Pitney Bowes business, and I think you will agree with me that if you go through each individual business, all of them are transforming. It is not just that one piece is growth. It is not just that one piece is changing their profile of the business. Every part of our business is evolving. Today, I am going to take you through the financial update, the financial model. I am going to cover three things. First, that our business and financial model continues to shift to growing markets. Second, that revenue growth and spend optimization contribute to long-term earnings and free cash flow expansion over the timeframe. Finally, we have built a flexible capital allocation strategy that supports this evolving business model.
Let us start with the business model shifting to growth. You heard each of the business unit leaders talk about where they fit and what market they play in. I want to pull that all together. Start with Commerce Services, Global Ecommerce, a growing business. $40 billion-$44 billion addressable market size, growing 12%-14% with a long-term EBIT margin of 8%-12%. Presort Services in a market of $3 billion-$4 billion, running from -2% to flat and growing a long-term EBIT margin of 15+%. I will remind you that our Presort business has actually been outperforming on the revenue and for the last five years, the EBIT margin, talking about economies of scale and experience. Software Solutions, a large market, $23 billion-$25 billion, growing 9%-11% with an EBIT margin in the 15%-20% range.
As we talked about SMB, Jason took you through the changing dynamics of his market. $2 billion-$3 billion of mailing, declining 5%-6%, and a shipping business, which we are participating in, that is a $2 billion-$3 billion business growing 9%-11%. Jason is shifting his business through time. We expect that the long-term EBIT margin of the SMB business will remain in the 30%-35% range. Now, underlying this, Christopher took you through how third-party financing creates an additional value play for Pitney Bowes. If you step back and you look at the financial model we have been building, where we have been going to in the businesses, it is a model that has shifted to growth and profitable growth. Let us step back and look at the revenue.
As we have shifted, if you take a look on the far left for 2016, on the bottom left-hand corner, you will see market growth. That market is, if growing at our mix, at the market rates, we would decline 1%. Now, Pitney Bowes actually declined 5% at this point, and you can see that mix of businesses in the far left. SMB made up 54% of the revenue composition. Commerce Services made up 24%. Production Mail made up 12% and Software made up 10%. As you move to 2018, you can see how quickly this portfolio is evolving. SMB now makes up slightly less than half. Commerce Services now makes up 43% and Software makes up 10%. We divested Production Mail. That is part of that continuous portfolio evolution. Now importantly, you can see the movement.
As we've shifted the overall business, at the market growth rates, we'd have grown 2%. At our mix and what we've done, we were able to grow 3%. Looking out over the long term, and you've heard it through all the business leaders today, they've talked about we're defining that, what is the long term? We're looking at 2022. We expect that the market growth with our composition, that we'd be growing 5%. We expect, though, that with the expansion of Commerce Services, as Lila Snyder told you, we have consistently outperformed that market growth rate because of the mix of our business, and we expect to be able to do that for the foreseeable future. As we look out to 2022, we expect to be able to grow in the mid-single digit, 5%-7% range.
I just want to pause there because in a relatively short period of time, we've taken Pitney Bowes from a business that had declined for a very long time. We've put together two consecutive years of revenue growth for the first time in a decade, and now we're looking at moving the business on a continuous basis to grow mid-single digits. Marc Lautenbach showed in his part of the presentation and spent time talking about transformation. It is far easier to transform a growing business than a declining business. We believe we're well-positioned here as we go forward. This business model is grounded in a combination of synergistic services. How does this all come together? If you take a look, you saw a theme through all the presentations, you have shipping and mailing. That covers our Presort business, our SMB business, and our Global Ecommerce.
Christopher Johnson took you through financing, which supports a number of these opportunities and cuts across shipping and mailing. Bob Guidotti took you through our software business. The software business is an enabler for other parts of our business, but we've also grown that business for two consecutive years. Bob Guidotti talked about the partner play and the data play, which will sustain that going forward. On the bottom of this chart, what you see are some natural adjacencies of these businesses all tied together. We have embedded software capabilities. I think a very good example of that are the Shipping APIs. This started with Lila Snyder's first customer. We built upon that, took that out to market, and were able to expand those capabilities and those offerings. Christopher Johnson finances a number of those.
We bring those capabilities into SMB and offer them to over 750,000 clients with good traction. Core competencies. We continue to shift this portfolio, but as you heard today, we know what we're good at, and we know what we're investing in. As we look out in time, we're looking to build upon those core competencies. One other theme you heard today, in particular from Lila Snyder and from Jason Dies, the USPS is an important partner. We're a very large partner with the USPS, but we're a Workshare partner first and foremost. We do Workshare partners with Presort as a good example. Those 16.6 billion pieces of mail are the most profitable pieces of mail for the USPS. This Workshare partnership, we've built upon that throughout the business to be able to expand our offerings. Finally, you heard a couple of times today, integrated Commerce Cloud.
I just want to pause for a minute on this one. This one doesn't get a lot of air play, but actually becomes one of the great foundations for why we've been able to move at the rate and pace we have. The Commerce Cloud, as we've invested into those capabilities, that's a combination of the ERP system we put in place in North America and the web capabilities that we built out. That's allowed each of our businesses to develop a digital relationship with our clients. It allows us to sell the majority of our supplies on the web and bring more and more product offerings to our clients in a much more efficient manner. I want to move from overall business model into revenue growth and spend optimization. This portfolio shift is creating sustainable revenue growth and earnings expansion. Commerce Services growth and profitability.
Commerce Services has grown rapidly, and we've answered the question a number of times over the last few years because we keep investing in that business, and we will keep investing in that business for the long term. That growth has been important, and doing it off of scale and efficiency over time builds a good foundation for the long term. Lila talked about being profitable in 2020. We were EBITDA positive last year, $28 million. As we look and combine that combination in with SMB and what we call new client value. SMB was a business when I first came in that I spent a lot of time staring at. It's highly profitable, great customer relationships for a long time. We've added on to that capability by bringing shipping in.
I think the exciting part is we're still very early into that journey. While we placed over 80,000 SendPro C, the capability, the SendPro Tablet that you see, that brings a lot of new value into the equation. I also think the third-party financing, which you heard Christopher talk about, is a great asset that we can bring to our clients. When I first came in and I was going through and I spent time going through that business at one of our kickoff meetings, I put up a chart, and it said that GFS was the hidden gem of Pitney Bowes. I think the ability to bring these financing offerings to a wider set of clients through third-party financing is a really exciting way to add value. Then software partner and channel contribution.
Bob's business had been a business that had kind of run steady and was in slight decline, and now we've grown it for two consecutive years. More importantly, we've invested in the core capabilities and the partner channel to deliver incremental value to our clients. That partner channel, if you caught it in Bob's charts, has added incremental pipeline, more importantly, incremental lift pipeline, where they're going out and originating these to our portfolio. That gives us confidence that we'll see improving performance in software, which has a nice leverage model as it grows. With all that revenue growth, you're going to see that that brings incremental profit over time and incremental cash flow over time. We walk through each one of the segments.
Commerce Services, which I'll just remind you, Commerce Services, again, is Global Commerce and Presort together, the model here for top-line growth is low double-digit. You've seen what's been the last couple of years here, and we expect that to continue. That will continue on the strength of domestic parcels, think about Newgistics, cross-border solutions, shipping solutions, and then bound and packet mail, which Lila talked briefly about, which is part of Presort. I think that's a good example of economies of scale and economies of experience. If you think about the Presort business, it has 38 centers across the U.S., leading market share, great customer satisfaction. You have all this infrastructure laid out. Bound and packet mail, the bubble envelopes, the flats that you think of, is an area that we had not played in a material way.
We have the scale, we've got the labor, we've got the transport. Now we've made an investment into sorter technology to help us go after that activity. That is a growth item for Presort. We expect over the term that Commerce Services will be able to deliver low double-digit revenue growth. From an EBIT perspective, you've seen an inflection here. An EBIT perspective, as we go through, we expect to be able to deliver double-digit growth year-on-year and an EBIT margin that's low double-digit. Importantly, this starts with Global Commerce delivering EBIT-positive growth in 2020. That's going to come on the basis of the investments we've made over the last several years, including to drive parcel volume and scale, expanding the network.
We added 4 locations in the second half of last year, consolidated 2, and we added 3 more so far this year. We're making investments to build out the scale to give us capacity to sell into on a future. Operational efficiency. As you can tell for a CFO, operational efficiency is something we do all the time. You heard it through a couple of the presentations today. It never ends. We've grown very rapidly in some of these businesses, as we do that, we continually step back to look at what we've built, what needs to be tweaked, what do we need to change to improve the client experience? It always starts with the client experience. How do we improve that in order to bring efficiency? That client experience has led to the success.
I think one of the interesting parts you heard through several of the presentations today is we have things that clients want, why we're seeing a turnaround in these businesses. Let me move to SMB. First, we're going to see that revenue decline moderate, driven by growth in shipping as well as third-party financing. The third-party financing adds, again, talking to clients, something that they were looking for. We have a great reputation in the market. We have the capability to fund this, and it's highly profitable. It's a great adjacency to build out for SMB. Shipping capabilities. Jason took you through, and you saw an example of the SendPro Tablet. We have increased the innovation in this area, significantly. That doesn't happen overnight. We made significant investments in technology, that brought SendPro C to market, and that was a relatively short time ago.
We're going to roll out over 20 new products to the international market. We're bringing shipping capabilities, the analytics wrapped around that, and the ability to finance that, to this marketplace. It's a real competitive differentiator. The other ability here is the new value beyond shipping. We talked briefly about that today, things like the apps on the device. That's a stream that we have not monetized in any material way, but I think represents an interesting opportunity to partner with others in this ecosystem to bring value to clients. SMB EBIT. This is an area that, as we've gone through, we saw that revenue declining over time. As we've moderated that, we've also brought efficiency to SMB.
Investing in the shipping capabilities, the third-party financing, and working through operational efficiency, we expect that as we get to 2022, we'd be able to deliver flat to low single-digit growth on a year-on-year basis. It's been a very long time since we've talked about SMB profit growing on a year-on-year basis. We expect to be able to maintain those margins because what the value we're bringing into this for our clients is also high margin. SMB, this is a major milestone combined with Global Ecommerce delivering profitability, which as we look out in the future, brings us confidence on a long-term business model. Software.
After two years of consecutive growth, the things that we've invested in, the portfolio that Bob has out there with Customer Information, location intelligence, you heard all about data, Customer Engagement, and then using the partner channel as a new go-to market, is why we believe we'll be able to improve the revenue growth to mid-single-digit over the term. This is also important because software is a profitable, leverageable model. As we grow revenue through all these offerings and leveraging the partner channel, that will also deliver incremental profit. We expect mid-single-digit profit growth year-on-year, as well as a mid-teen EBIT margin for the software business. Let's put the portfolio in context.
If you look at the portfolio, this shift to higher growth markets, not just in one business, but across the entire portfolio with Commerce Services delivering low double-digit growth, SMB, a low single-digit decline, and then software mid-single-digit growth, that will put us in a trajectory to deliver mid-single-digit growth over the long term. Transforming a company, this transformation doesn't end when we get to 2022. One of the things I love about what I see at this company right now is I see the pace of innovation increasing across the portfolio. The investments we're making, the creative ideas that are coming with it will sustain that revenue growth over the long term. SG&A as a % of revenue. As we think about operational efficiency, this is one of the key components. Obviously, revenue growth helps.
If revenue growth is improving, it's a lot easier to hold your expenses flat and let revenue growth go up. We'll see an improvement to our E/R simply from a revenue growth. Shared services and corporate structure are another area that we have made more efficient through time. I actually think we've actually made it better through time as well, better service to the units, better service to our clients, and we've streamlined how we approach this through a corporate structure, and we simplified what we do. That simplification and optimization is not just in shared services. That's in how we run the businesses day to day. It results in improved client experience, better decision making, faster decision making, and better able to serve the market.
We believe we're going to be able to take out and improve the E/R by over 500 basis points between 2018 and 2022. I would look backwards for some proof points on our ability to do that. We have taken out significant spend from the overall business over time and used that to reinvest back into the growth and the transformation of this company. Revenue, combined with that spend optimization simplification, is going to drive overall EBIT growth. We believe as we get to long term, that we'll be able to drive double-digit EBIT dollar growth with a mid-teen EBIT margin. If you look at that and go back by the units here, Commerce Services will deliver double-digit growth on EBIT dollars, SMB flat to growth on EBIT dollars. I just like saying that, flat to growth in SMB on EBIT dollars.
It's been a long time, and the team's worked really hard, but we see a good line of sight to that. Then Software, mid-single-digit growth. Again, compare back to 5 years ago, this is a remarkably different company that we have in front of us today as we look ahead. Let me put this together in a long-term financial model. Again, this chart is meant to represent 2022 year-over-year change. Commerce Services will represent over half of the portfolio, 55%-60%, delivering low double-digit revenue growth and double-digit EBIT dollar growth and a low double-digit EBIT margin. SMB, 30%-35% of the portfolio. A big change through time. Where just a few short years ago, it represented over half of the business. Low single-digit decline in revenue, flat to low single-digit growth in EBIT, and a 30%-35% margin.
Then Software Solutions, roughly about 10% of the portfolio, because while it's growing mid-single digits, the growth of the rest of the portfolio is also continuing. Mid-single-digit growth on revenue, mid-single-digit growth on EBIT dollars, and a mid-teen margin. When you put that all together for Pitney Bowes, mid-single-digit revenue growth for the company with double-digit growth in EBIT dollars and a mid-teen EBIT margin. Let me move to the next section here, and that's our flexible capital allocation strategy. We've spent a lot of time around capital allocation because it's so important to support the business. If you take a look at that strategy, it starts with continued investment. What you heard today from each of the business leaders is investment into their business. Now, that investment is funded through a combination of items. We obviously have gone out and done some acquisition.
We've invested in capital, all the spend that we've taken out of the business, we've also reinvested a chunk of that back into that business, new capabilities, and we've done that through portfolio evolution. Sometimes that's acquisition. We did our largest acquisition in late 2017 with Newgistics, and sometimes it's divestitures for things that are no longer strategically important to the portfolio, like our production mail business. We're balance sheet-focused. We look at the long term, we look at the health of the balance sheet, and that's an important part of our capital allocation strategy. Of course, return to shareholders. I want to spend a minute on how we're supporting the revenue and earnings growth. Continued investment. Think about what you heard today from each one of the leaders. These are just a few of the examples that we've invested heavily in.
Shipping capabilities, everything from shipping APIs, which we are doing for a client that now we have an offering into the marketplace, we offer broadly out there through a number of partners, and we've brought to our SMB business. Third-party financing. We've been deliberate, and I'm going to use that word deliberate here, to build a rock-solid base on a third-party platform with the right industry experience, the right risk profile. That leverages the strengths of Pitney Bowes. It leverages the bank, leverages the deposits, and it helps optimize the long-term future. Automation. Automation takes the form of a number of different areas. We've invested in automation in Presort. In Presort, we have one of our facilities that we did a total sorter refresh. We've nearly doubled the amount of throughput per hour of what that facility can handle.
That's a great investment with a strong ROI. We've also invested in auto sleevers, we're deliberate here. We do the business case, we look at what the return's going to be, and it has to be an acceptable rate of return. That automation allows us to get more capacity and more throughput through existing centers. Network optimization. We've invested in facilities that Lila took you through. We invested in four in the second half of last year, consolidated two to get more scale, and then we invested in three so far this year. We look at the portfolio. The portfolio has evolved significantly. We look at inorganic components of the portfolio. We're investing for long-term growth. That could be something like Newgistics. It could be a technology plugin, all of them have similar themes.
Has to be strategically coherent, it has to deliver synergy to us and to our business model. It has to drive an acceptable ROI. We have a very strong discipline on acquisitions. We have walked away from ones that don't make financial sense. That's important because we want to make sure we use this capital effectively. As we think about the portfolio, we look at what has that strategic coherency. Is it a market leader? You've heard through a number of these that we're very well-positioned in the market with our businesses. If it's not a market leader, does it have an acceptable plan to get there? Obviously, it has to earn an acceptable return for the portfolio. Let's talk about debt and the maturities that we have coming up. You can see maturity profile across the graph on the left.
In 2018, we reduced a nearly $600 million worth of debt. This year, we'll renegotiate the credit facility in the back half of the year. For 2019 through 2021, that we will refinance with a combination of term debt and bonds, the remaining portfolio. An important part of this is we're also going to create warehouse capacity to support Wheeler Financial. It's an important part of that model. We have our eyes wide open on the capabilities. We have the cash flow and earnings to support this, and we have a plan to deliver this over the timeline. If we take a deeper look at the debt portfolio, you can see the evolution from 2017 to 2018. We expect that to dip slightly here in 2019. I wanted to give you a deeper flavor of the composition of the debt that's out there.
Total debt, as of 3/31, was $3.3 billion. The implied financing debt is $1.1. I want to pause on it just for a minute, because this I view as good cholesterol. This implied financing debt supports earning assets over the long term. It's an important part of what we have. That would leave an implied operating company debt of $2.2 billion, $900 million of cash and short-term investments on a balance sheet, for net debt of $1.3. We're realistic. I know we don't screen well on a debt profile when you look at it, I think understanding the composition is helpful as you understand the business, more importantly, where that business is going over the long term. That leads me into free cash flow. We expect that free cash flow return to growth, year-over-year growth, in 2022.
I want to spend a minute on this, because we have important sources of cash, and one of them that you've heard over and over through the units is improved earnings. Great way to drive cash flow. We'll also improve working capital. Some of these investments we've made in the underlying business, and when you hear about improving NPS scores and customer sat scores, that yields improvements in working capital as we go drive that efficiency. Uses of cash is an important component. We want to use the cash to drive the business model. One of the uses of cash is the third-party financing. I want to spend a second on the graph on the left-hand side. That gray shaded area is an area that's important. You can see in 2017, that gray shaded area is up.
That was actually the runoff of the finance receivables. If you remember Chris's graph, he had that graph that was coming down 10%-11%. That contributes cash, that's not how we want to get our cash flow. You can see that that contribution's declining, and that's from two areas. First, we're doing a better job retaining those clients and not having it run off at the same rate. Second, third-party financing is going to kick in over that model, and that's going to consume cash. That's going to consume cash, and that's why we took our free cash flow guidance down in 2019. That's a good use of cash because it's building up long-term earning assets for the company, and that's what we'd like to have. Shareholder return.
Total shareholder return for 2019 remains the same as the prior years. We made an important change to that mix at the beginning of the year. We took a dividend action. For 2019, we maintained that return by adding a share buyback component for this year. We'll still return $140 million to shareholders through a combination of dividend and share buyback. The dividend yield here, we believe we're at a competitive dividend yield for the company we're becoming. We believe in that for the long term. You'll see that here combined with share buyback and a competitive dividend, the total shareholder return. This new mix does provide additional flexibility as we invest in these businesses. I want to spend a minute on this chart.
This is an important chart here because I want to show the components of how this comes together. I'm going to start on the far left. The purple bar is free cash flow for 2019 for our guidance range, as well as the blue bar next to it for earnings. If you go over the time to 2022, you can see the effect of the changing portfolio. First, you're going to see as Commerce Services gain scale, it's going to drive profit. That revenue growth with driving profitable revenue growth, it will contribute significant earnings. SMB now becomes a green wedge on the chart as it actually grows earnings for the 2022 period. Then Software continues to grow and contribute. That middle bar that you see is the business segment-driven earnings. That's a nice change from where we are today.
Our debt here that we have out there, as we're going to refinance that debt, our rating is different. That's going to cost us more on interest expense. We've factored that in. Then on tax, as we've grown our earnings, even with tax reform, we'll still have to pay the tax on that. That'll take us over to the far right blue bar. 2022 earnings. We expect to get improvements in working capital. Then what I just spent a minute on free cash flow, is talking about the finance receivables. That will consume cash. You can see the earnings down to free cash flow. Over that time, with the changing portfolio, the investments we've made, the evolution of that portfolio, we believe we will grow both revenue, profit, and cash flow over the period.
I'd like to leave you with a few takeaways. First, that this portfolio that we've set up and are driving is going to deliver sustainable revenue growth. It's always easier to transform a growing company. This portfolio is also balanced between growth and improved profitability. We're going to continue to drive operational excellence. As Marc said, this never ends. We're going to continue to go look for ways to get more efficient and deliver better client experience. We have a balanced investment approach between growth and delivering a competitive shareholder return. Finally, we've built the strategic flexibility to drive our valuation. As I wrap up for the team here today, the management team, first, I want to thank you all for coming.
Hopefully, what we've been able to deliver to you is a good description of how this portfolio has evolved through the transformation, through the investment in the business, and a very deliberate approach to how Pitney Bowes does business. With that, I'm going to invite my management colleagues up on stage, and we will join in some Q&A. Thank you. All right. I lost our-
As you ask your questions, if you can just raise your hand, announce your name and firm that you're working for.
Yes.
Yeah, Kartik?
Yeah. Kartik Mehta with Northcoast Research. Marc, just a bigger picture question. You went through this entire presentation. Almost every business seems to have opportunities in some way, either EBIT growth or revenue growth. In the past, you've also shown those opportunities, but it hasn't turned into maybe the expectations that you've had and investors have had. I'm wondering, what is it that's going to change or what has changed that the next three years will be different in terms of how you deliver numbers and you live up to some of the things that you've put into this presentation versus the past?
Yeah. I guess I would have a slightly different point of view. If you look in 2016, we said we were poised for revenue growth. We grew in 2017. We had the fastest growth in a decade over the last two years. Where we have struggled a touch is on the EBIT line, I think it's for the reasons I said at the outset. As you contemplate the investments that were required in the business, we've been very steadfast in holding firm on making those investments. As we've done that, candidly, because of some of the changes we've made, it caused visibility to be less than what we thought. I think, if you sit through the last 3 hours and you say, "What's different?" I'd say, first at a macro level, the company's growing already.
Secondly is, as you tick through the businesses, Software's growing as well. That's different than before, that will accelerate. Underneath that, the partner channel continues to mature. GFS, we have a whole new set of capabilities that candidly we spent two years investing in. We're now in the market with those opportunities. Perhaps what is most exciting in some ways is the revitalization of the SMB business, you think about the opportunities that we're now poised to go after. That doesn't happen overnight. You have to make the investments and sustain the investments in the product development, the brand, and other things in order to have those opportunities. I hope you don't walk away with, "This is on the come." There's plenty of proof points that you see right now that should substantiate the case. Al?
Yes. Hi. When will be the first year that your earnings will be higher than the year before?
Stan?
We're not going to go give guidance by year here. I think if you look, you'll see the proof points along the way. First, Lila talked about being profitable next year. Jason talked about having year-over-year profit growth in 2021. You guys are good at math. I'll let you run your models for where you think that plays out. If you look at that second to last chart that has 2019 to 2022, I think it gives you a good flavor of where we're at over that long term, that's earnings expansion and free cash flow expansion.
I think there's a trajectory to how this story unfolds, and that is, the first thing you got to do is you have a point of view of where you're going to go. We have that point of view, and it's around shipping and enabling technologies. The second is you've got to make the investments that build the capabilities, but also investments that get the scale. If you look at the trajectory of Amazon, I don't mean to compare ourselves to Amazon the least. That took them 10 years. It took Apple 20 years to build the franchise in. We're not going to take 10 or 20. We've pointed to where we are in that path. When you're going through a transformation, you're trying to build scale. The worst thing you can do is try to move to profitability too fast.
If you think about those kinds of businesses you have, we could do things to produce an inferior client experience, to tap down the investments. It doesn't produce the result that you want for long term. If you want be clear about one thing as you think about investing in our company, we're not going to make that trade-off that impairs the long term, for a year. We just won't do it.
Anthony.
Good morning. Anthony Lebiedzinski from Sidoti. On the Global Ecommerce, as far as the target EBIT margin change, is that mostly just a mix issue? Also, relating to Global Ecommerce, I think you talked about getting more clients, doing more bundling, more effectively. Can you give us an example of that?
Sure.
Please.
Marc, you want me to take that one?
The first part of the question is, it is. The overall long-term margins change from 10%-15% to 8%-12%, but the market opportunity doubled. As you contemplate the market opportunity as we see it now, it comes with less margins. That said, a market opportunity that's twice as big should bring with it more absolute profit dollars. I think you can get fixated on a particular variable, but the overall market is continually what we see consuming. Lila will talk about the clients.
On the bundling, just to put it in perspective, if you look at our sales pipeline today, just over half of it are bundled opportunities. What that means to us is, in the conversation we're having with a client, we are seriously talking about more than one service from Global Ecommerce. Examples of that could be where traditionally we would've sold returns, we're selling returns plus delivery at the same time. Where we would've traditionally sold delivery, we're also talking to them about Pure Post, which is our Shipping API product. Many retailers access, for example, Priority Mail from the Postal Service for a portion of their packages. We're bringing that through our technology layer by bundling our delivery service with our Shipping API service through a single technology interface. Could be that we're bundling Borderfree or cross-border retail platform with domestic delivery.
There's a bunch of different flavors inside of there, but think of it as we're out having conversations with more than half of our opportunities about more than one of the services in our portfolio, which means every new client we bring on has a lot more value attached to them than what you would've seen from us a year ago, or certainly a year before that.
It also has a subtle but profound difference in that the kinds of conversations you have with clients when you have a broader relationship with them is different. You call on different people, you have a more sticky relationship, and there's more economic opportunity around those relationships. Shannon?
Thanks. Shannon Cross, Cross Research. I have a couple questions. Stan, can you talk I apologize, my voice-
One sec
is gone. Stan, can you talk a bit about your balance sheet in terms of the debt that's coming due over the next few years? I know you're pointing to cash flow growth, but cash flow's been declining for several years. You'd made the decision to buy back stock, which obviously bond holders don't always look at favorably. I'm just curious as to how you sort of balance out your expectations in terms of refinancing the debt, and maybe how some of your conversations have gone.
Sure. First of all, let me start with the share buyback. We did that and committed to that for this year in 2019 to give a transition year as we made the dividend change. As we think about the balance sheet and the debt, we broke out that component of the debt and showed the implied financing debt that goes with that. We spent a lot of time, both internally as well as with our banks, on what we're doing on the refinancing. We're confident we'll be able to refinance that debt. I did show you the realities of that in the second to last chart is going to be higher interest expense. We built that into our long-term model.
We think with our profile and the cash flow of our profile, that we're competitive in the area that we're at, and we'll have the ability to go to market and solve that.
Okay, thanks. I had a couple for Lila. I'm curious, we met with you a few weeks ago, since then Amazon came out with their, "We don't care about money. We're going to spend $800 million on one-day shipping for free." Again, Amazon's been a great stock, so. I guess, how do we think about that in relation to what you're offering with a three- to five-day, and how are your retailers thinking about that? I'm also curious, Amazon also made the decision yesterday, I think, to stop holding inventory for some of their Marketplace partners. I know you don't want to hold inventory, but I would think it might level the playing field a little bit, so I'm curious as to how you think about that. Thank you.
Yeah. It's a great question. The first part I should've probably talked more about in my remarks. We recognize three days is not one day, okay? It's not as if we're pretending that a three-day network is exactly the same as a one-day promise. The reality is Amazon is roughly half the market, everybody else is the other half. The way that Amazon gets to you in a day is that they have a distribution center within 20 miles of every one of our houses. I guarantee you, if we had clients that had that much scale and could get product within 20 miles of every U.S. consumer, we could also deliver a one-day service.
The reality for the rest of the world, the rest of the retailers, is that they aren't big enough, they don't have enough scale to split their inventory into hundreds of distribution centers, nor would that make sense for them. The majority of retailers, and particularly the ones that we target in that kind of mid-market size space, are fulfilling out of a single distribution center typically, or two. For those clients today, our service already reaches 75%-80% of consumers in three days, which is an attractive enough value proposition for consumers who like and appreciate that brand. The problem is, it doesn't get to the other 25%. Our first task is to get faster so that every U.S. consumer can be reached by, call it the average retailer, in three days or less.
We think that's an important step forward, and all the consumer research that we've done would suggest that yes. Consumers are excited about a one-day promise, but most consumers will wait three days, particularly if they really want what you have to offer. Most brands who aren't Amazon have things that we go to their site specifically. The things that are a little bit harder, I think, and where I think we'll see a lot of the Amazon one-day service, is consumables. The things that you're most likely to need or want the same day or the next day are toilet paper and dish soap, and the kind of stuff that our retailers aren't really selling, right? We tend to be focused on fashion and beauty and jewelry and things that are differentiable, and therefore, you're willing to wait three days.
No longer are you willing to wait five days or more, right? I think it's leveling the playing field. It's not perfect, but it's getting us into the ZIP code of what the Amazon offer is, and most consumers will say, "I like what you're offering. I'm willing to wait an extra day or two for it." Again, the three days is to 100% of consumers. As we speed up the network, some large proportion of those consumers will get things in one day and in two days. Depending on where that distribution center is, think of it as a one-day local model, a two-day regional model, and a three-day national model. You'll see that consumer promise get more attractive across the board.
All right.
That's sort of the first piece of it.
Go ahead, finish.
On the second piece, I think Amazon is shifting more away from the retailer model, in some cases, to the marketplace model. I don't think that aspect of their shift impacts us in any material way.
We have a strategic belief that's pretty simple. First, I have tremendous admiration for what Amazon has done. You can't help but admire it from any rational economic perspective. At the same time, we have a strategic belief that the whole world's not going to go Amazon. I think that was probably affirmed yesterday, in their announcements, to their new arrangement with small businesses, or lack of arrangement small businesses. Interestingly enough, the juxtaposition was moving to large brands and larger players. I think there's going to be a natural reticence if you're a large brand or a large retailer to move your future to Amazon, and what they were mute on was private label. That is kind of the undercurrent of all of this. If you believe that Amazon gets 100%, then this is kind of a different ballgame.
For that part of the market that they don't attract, the question becomes how is it they provide something close to what Amazon can do? We think we've got the best chance to be that alternative. There's very few others that within an e-commerce network can provide 250 million parcels of scale, and we're on our way to doing it. That's kind of the underpinnings of the strategy that we believe. In the middle row here.
Hi, Jordan Everett from Barrington Capital. There's been a pretty major disruption in the business of Stamps.com recently and their relationship-
Stamps.com
with USPS. I'd love to hear your take on what that means to you. Alternatively, is it some trend that could also be negative for you?
I'll start. Then I'll let Lila and Jason jump in. Obviously, we watch closely what others in the industry are doing. The first thing I would say, again, this is subtle and to a degree, I think we got some level of criticism when we began our Global Ecommerce efforts because Lila had a strategic belief, again, I'll render these strategic beliefs clear so you can make judgments on, that it was important to have a broader relationship with the client than just an API-based strategy.
If you think about that, what we call the honeycomb chart, which is kind of that API first entry point and all the stuff behind it, all that stuff behind it comes with investments, different margin, different et cetera. People looked at us and said, "Why wouldn't you just want to have an API relationship with them?" We said, "Well, we think you can have a fuller, more economic, more enduring relationship if you've got these breadth of capabilities." I think that strategic belief is bearing out in the marketplace. That's point one. Point two, they made a very clear statement that they were moving away from the USPS. That's a strategic choice. That's a strategic choice that we're not going to make. Then you've got to make the judgment about what you have to offer to others and how compelling that is or isn't.
The part that's an opportunity for us is they talked about raising their prices to their clients. Far, we've seen no evidence of that, or at least last time I checked, we hadn't seen any evidence of that. If they begin raising their prices to their clients, then that creates an opportunity for us to have a different kind of conversation. I would say a fuller conversation than we've had before. Those relationships that they had with those clients were pretty sticky. Our API business has grown tremendously over the last couple of years. It's gone from 0 to over $100 million pretty fast. That said, Stamps.com, it's something that clients were reticent to move away from. A price increase might cause them to rethink that dynamic. Lila, I'll let you elaborate.
I think that's well said. The only thing that I would add is their business model was built solely on a margin-sharing relationship with the Postal Service, and the Postal Service has taken part of that margin back. It's the way I would think about what's happened to them. Our relationship with the Postal Service and our clients, as Marc said, is much deeper and is based on a lot more value that we're providing. It gives us the stickiness, the ability to add on services. That physical touching of the parcel actually saves the Postal Service money, right? It is advantageous to them when we're a Workshare partner and we're doing physical work on their behalf. That is a cost savings for them, that's reflected back in the relationship that we have.
The value we're creating for them, and vice versa, is greater than what it is, I think, in the Stamps model, and that's why from our perspective, there's always more opportunity because that's more enduring.
With the economic pressure on the Postal Service, if you don't have a bilateral relationship that produces profit on both sides, you're at risk. As you look at the relationships we have with the Postal Service, we believe that we've got seven different NSAs that all have different expiration dates, but as you interrogate every one of those NSAs, essentially the commercial agreement between you and the Postal Service, we're very convinced we've got strong economic underpinnings of all those relationships. They may evolve, but we believe, based on what the Postal Service has said and what we know, that those are very compelling economic agreements. Not just for Pitney Bowes, but also for the Postal Service. By the way, one of the things we don't understand is we've been multi-vendor for a long time.
This notion that you have to be multi-vendor is something that we understand. Why you would do that and walk away from the Postal Service is something you'd have to ask them about.
Oh, hi. Yeah, thanks. Just to follow up on some of that in the e-commerce side. In that segment of the market away from Amazon, I would think that the head-on competition is UPS and FedEx. I guess I'm newer to the story, but why are they coming to you guys, and how does that competition Because they've obviously got massive scale. You said not many people can do it. They're the only two people that can do it, I suppose. How is that competition? How do you face off? How's that sale pitch progressing?
Yeah. We compete with them every single day, is the short answer. We win for the three reasons I said before. We are not going after the delivery business of the largest retailers in the country. That would be insane, right? Where they win and where they are aggressive is with very large retailers. We're focusing in the mid-market. Think about retailers who you probably know the name of, but are a lot smaller in terms of their volume. What happens to those retailers with a UPS or a FedEx is a couple of things. Number one, there's no consumer focus by those carriers vis-a-vis those particular clients. You are fitting into a network architecture that they have built. You may have all of your orders come in because you're more West Coast focused.
They may all come in between noon and 4:00 P.M., you want a cutoff time at your fulfillment center of 5:00 P.M. because then you can have a better delivery promise. When you talk to us, we'll talk to you about what that means and how we can make that work. When you talk to one of the larger providers, they will tell you, "We pick up at 2:00. We will be there at 2:00." You try to negotiate something that's flexible, but they're solving a different problem, which is network efficiency. They're not worried about you or your consumer in the mid-market. If you're one of the top 10 retailers in the country, different story. That's why we're not going to play there.
Part of it is that focus on the consumer and the fact that our network is built with the flexibility to handle some of those requests that are a little bit more specific that tend to get ignored at that level with the large carriers. That's one piece. The second piece is this notion of your brand. If you are a UPS client, they want you to use their tracking service. You've all experienced this as a consumer. The tracking emails typically come from UPS, not the retailer you bought with. It might or it might not have in eight-point font at the bottom, "This is an order from retailer X." My household typically says, "Which one is that?" Because we're ordering enough online that we're confused about which UPS package is coming tomorrow versus the next day.
Our focus there is on branding that consumer experience around the client and the retailer and their brand. It is absolutely clear what you bought, who you bought it from, when it's coming, and why you love that retailer. That doesn't resonate with every retailer. For retailers that, to Marc's point, don't want to be on Amazon, who are building a brand for the long term, and who believe that their special sauce is whatever they've built their brand around, whatever lifestyle they want you to feel like you're a part of, that's a very prominent value proposition. That's one example. There are several others. That notion of putting the client's brand first, we win on that all day long. The last one is this idea of data science. We're able to bring technology and data science.
We're able to bring technology that's easier to integrate to. That is, we're willing to do a little bit of customization to make it work for you. We're willing to help your technology team, which is probably pretty small and underfunded, do the integration, right? Those are value propositions around the technology that you won't get from some of the larger guys if you're in that middle space. I'll go back to one of the things I said earlier. We know that they will be bigger than us forever, and they can outprice us every time. I don't want to play that game. We're participating in niches in the mid-market with clients who appreciate and are willing to pay for the value that I just described.
The other aspect is when we think of ourselves in that particular equation, we think of Pitney Bowes plus the USPS and in the scale that they have overall. We tend to think of it in a little bit different way than just Pitney Bowes against UPS or FedEx. We think about it more broadly.
Hi, John Moore from HSBC. Just in terms of e-commerce profitability and EBIT profitability, from here, would you expect it to be pretty much of a linear march on scale to that profitability and beyond?
Go back to slide 83. What slide 83 shows is it's not I think if you look at the history of platform businesses, they kind of go like this, and then when you get to scale, they tend to have non-linear growth, and then they go back to linearity once you get to scale. If you look in your respective books, I think it's on chart 83, as I looked it up because I was expecting the question. That's kind of what we expect, and that's kind of what we saw in our Presort business. That's candidly what Amazon saw as they were building platform businesses, and that's kind of true to every other platform business as well.
Okay. For the third-party financing business, is there a target mix of Pitney Bowes equipment versus third party that you're looking to achieve, or does that play into how fast you ramp that business? Thanks.
Okay.
In terms of the mix, for the third party for Wheeler Financial, that's going to be exclusively third-party equipment finance. As it relates to the captive finance business, we will stay and remain focused on our SMB financing as well as some of the other aspects that I shared with you on that circle chart early in my presentation. We'll keep those two independent and separate with the management team that sits over top.
The way I would think about the finance business overall, from here to $200 million or $300 million, we've got a fairly inexpensive deposit base, where we're advantaged to go after those markets from an economic perspective. We've got deposits that are much better than market rates. As you get above that $300 million, I think, how it is that grows and how it is you think about, does that retain on your balance sheet or do you syndicate that? That's to be worked out.
Thank you. My name's William Mansfield from Vibra Capital. I had two questions on two different topics, if you don't mind. The first question on e-commerce. I think you had a slide up where you're talking about going from the volume of $110 million to, I think it was $230 million or $250 million packages over the next four or five years. Can you do that without acquisitions? Sort of what's the level of CapEx investment that you need to go from the capacity you have today to that future capacity?
I'll answer the growth question. I'll let Stan talk about capital. I'll stay in my swim lane. I think from a growth perspective, we did say $250 million, $110 million in 2018, $250 million is the exit rate coming out of 2022. That's just on the domestic parcel business. Our delivery and returns based on our current growth rates, you get there. We don't have to do anything extraordinary from a growth perspective. We just need to continue to deliver what we're delivering today in that business. No acquisition required to get the volume. We do need to continue to invest in the network to handle that capacity. I'll let Stan talk about the investment.
A couple points. First, I wouldn't preclude an acquisition from there if it makes sense and it adds to synergy and long term. That's something we would certainly consider. From a capital perspective, I think our capitals, when you look at it's easy to kind of fall back and say, "Well, it hasn't changed dramatically." Underneath the covers, it's changed a significant amount on where we're putting that capital, and it varies year by year. For example, last year we doubled Presort's capital, and this year we're digesting some of those investments as we roll out the technology. You're going to see that shift. I think within the envelope that we've talked about, we've included the capital required to build out the capacity needed to get to that level of parcel.
The one thing I'd say about acquisitions, just to make a different point, is we'd love to make an acquisition if it made economic sense. We don't see acquisitions out there right now that make economic sense either from a price perspective or a risk perspective. If that changes, then we become more acquisitive. I don't like how the assets are priced right now.
On the second topic on the Financial Services business. Perhaps a technical question, all the profitability, all the financial reporting of that business, is that in the SMB line? Is that in the North America mailing line?
It rolls up into the external reporting segment of SMB. There is a part, as we talked about earlier, a part of that pivot back to growth in the overall SMB business.
Stan, I just wanted to kind of follow up on the debt refinancings. Just a couple of thoughts. In 2019, will you be buying back shares considering that you have these debt refinancings coming up? If so, at this current environment, what kind of a rate are you anticipating? What kind of an increase? You do have some decent amount of debt.
Yeah
wondering why you would buy back shares since you've cut the dividend in the past. I'm just trying to understand maybe how you want to use your cash and why the approach.
I just want to make sure you said for 2019.
Yeah.
Okay.
Yeah.
We've already announced our share buyback for the year and said that we would spend roughly $100 million on share buyback. If you think about the return to shareholders we had in total was $140 million in 2018. We said we would equate that in total for 2019. We're not committing to future share buyback. At the $140 million level, that would leave us $21 million of additional authorization. Candidly, we think our stock's undervalued right now, so we think it's a good buy for the company as we look at that. I think it still leaves us the right capacity to go ahead and do the refinancing that we have to do for 2020 and 2021 as we look out forward. I'm not going to talk about the rates necessarily. You can go look at the rates for our ratings class.
I don't necessarily want to give all the banks here what I'm willing to pay.
I guess, based on the conversations you have, you seem pretty confident that the refinancings will be completed. Do you think we'll have some finality this year, or is this going to leak into next year?
We have a path out there that we've laid out to do those refinancings. Given where we're at, we probably will start earlier than we might have in the past. We talked also about renegotiating our credit facility here in the back half of the year. We'll start earlier, but we think we're on a good path with a good plan. I got a great treasury team, so I'm not worried about it.
Hi. Evan Behrens, Behrens Investment Group. Looking at page 83, maybe this is another way that we can look at the Global Ecommerce business. 2022, 2025, when you look backwards, what is the expected return on investment that you are looking for, and how do you go about benchmarking that along the way?
I can start here. When we go out to do investments, we have an investment committee that we go through and evaluate because it's not first come, first served. Several of the members here sit on that investment committee, but it's not first come, first served. We have a hurdle rate for IRR, which is a very healthy hurdle rate. We're very disciplined about how we go about looking at that. If we were to look out forward to 2023 or 2025 and declare what was success, it would be exceeding that hurdle rate and making sure that that brought the right benefit to the company and was for the long-term value. We do turn down a number of capital requests that come in because they don't meet those categories.
For example, as we talked about the sorters and Presort was one of the examples we gave. When we looked at that, we looked at what the hurdle rate was. Could it exceed? It did. We made that investment, and we were doing things like five for three, take out five, replace for three. We don't stop there. We actually go back as part of a disciplined process, and we go back and look at what return did we actually get on that investment. If we look at those refreshes we just did, Lila and I just went through this a few weeks ago, all of those, with the exception of one site, have exceeded their IRR that we were looking for. We use that to tune what we look at going forward.
It's not just that because Lila's business is growing the fastest right now, that gets all the capital, and that's far from it. We are making trade-offs across the businesses to do that. We have a very disciplined process. We look at it in hindsight, the board looks at the larger ones as well, and the leaders here will come back in and report on the success or not of those investments.
I think there's a temporal dimension to your question. If you look at that, if I'm remembering the chart right, I may have given you the wrong page number. I don't think so.
That's all right.
You think about return on capital in Commerce Services and Global Ecommerce differently until you get from where we are today to scale. If you go back to one of Stan's concluding charts and you look at the incremental cash flow and incremental profit that comes from Commerce Services over the next several years, it dwarfs SMB and software, even though those businesses add profit. Once you get into steady state, that dynamic changes. The point that I would make is if you look at the cost of adding a node to the network, and by the way, Presort has 38, Lila?
38.
Yep. 37 nodes to the network. I think when I joined, it had 37. Once you get a network that's kind of up scale and has the right geographic footprint to it, there's not big capital investments, but even if you do, if you've got to add a node to the Commerce Services network, how much does a node cost? It's not big money. It's not big numbers.
I suppose I'm looking for more specificity. When Newgistics and Borderfree were purchased, let's call that $900 million of capital. There's additional capital. As an investor looking out longer term, 10, 12, whatever years, when you sat in front of the board, there was a return hurdle expectation.
Right.
From an investor's standpoint, in 2025 or 2022, wherever this line starts to get to scale, is it a 15%, 18%, 20%?
I'm sorry. I misunderstood the question. We've said this before. Our required return on any acquisition is 15% IRR, and there's a couple other characteristics that go forward, and we would expect all those investments to conform to that over time.
It's fair for us to pick a date out in the future and extrapolate that based on the capital that's been committed to the business.
Yes.
Okay.
It's not unfair. We tried to lead you to that today.
Yeah.
We may not have done it quite as precisely as you'd like.
No, it's just.
I think it's not only fair, I think it's appropriate.
Okay, thanks.
Mike Shore with Darsana Capital. I had two questions, Stan, for you, and then two on the SMB.
First one is, you talked at the end of Q4 about potential impact from the rising tariffs. You didn't mention it again on the Q1. I'm just kind of wondering, is that still an issue? Is there kind of an incremental potential hit to earnings this year? Second, just to be clear on the share repurchase, I know you've talked about the $100 million this year and $40 million dividend, but is the 100, is that the commitment that you will do that this year? You'll complete that, and it'll be a kind of a total return of $140 million for the year.
Yeah, two good questions. First on tariffs. What we've baked into our guidance is a 10% tariff. An incremental to go to 25, which is where we would fit in, and we are seeing that in the quarter, would be an incremental impact to us. We talked about that as we gave out our annual guidance here. Since our last earnings call, we've seen that tariff go back up. We're not standing still. We've been working with our suppliers for several months to try to reallocate the supply chain and redirect it so that we can minimize that tariff impact. It's clearly going to be an impact if it stays at 25%. We're doing things to try to mitigate that, but anything above the 10 would be an impact to what we're looking at.
We look in the grand scheme of things, it's not huge dollars on a full year basis. Let me go to the second question. On share buyback, we've said that we would spend $100 million, and we are looking to spend $100 million.
The authorization is a little higher than that-
121 is the total authorization.
You'll have some.
20 from our previous authorization.
You'll have some go in for next year. On the SMB kind of guidance or kind of long-term trajectory here, just to be clear, is kind of 2021 over 2020, that's when the growth is? Or is it 2022 over 2021? Maybe just wasn't clear on that. The second part of that is, how will you actually get there? Meaning, are you suggesting that gross profit won't be declining in SMB anymore, or is it kind of an operating expense issue? What will that actually look like for the SMB P&L?
You want me to start, or you want to?
Why don't you start and I'll-
Yeah. Just to be clear, the statement's year-over-year, EBIT flat or better in 2021, right? Compared to 2020. The answer to your second question on how is yes to all of the above, right? We think we have certainly lots of opportunities around operational efficiency. That notion of simplicity, simplifying the portfolio, just like we take complexity away from clients, we got to do a better job of doing that ourselves. We think we have a broader mix of offerings and capabilities now to bring to the market that I think are going to be more compelling and allow us to not only retain more of our clients, but to acquire new clients at a faster rate and pace that we've been in the past. Then you start to think about the other things that we talked about, those other adjacencies.
It's a real opportunity for us to monetize. I mean, the Wheeler Financial piece is just the most evident example of that. It's a little bit of everything that gets us there.
I think if you look at over the last 18 months in SMB and look at every line on their income statement, it reflects that already. As we've stabilized the gross profit margins and the streams have been normalizing out, which is why we see that rate of revenue decline moderating. When you go look at the operational efficiency, both the SG&A and G&A have improved over that time. Remember, they're our biggest segment from a profit point of view, so they carry a lot of the overall allocation. As we simplify the overall company, given they pay for a big chunk of that bill, they also get a big benefit from there.
Just if you look at the mix of the business, as we move more to the financing business, the profitability or the gross profit of the financing business, you just mix up. As that becomes a more important proportion of the revenue, that helps gross profit. Then, I continue to point out to my colleagues in SMB, Dell's SG&A for their small and medium business. Now our small and medium business is slightly different. We've made good progress becoming more efficient, so it's not something that the team is standing still, but there's more to do. For example, in Europe, we're basically taking a clean sheet to our European structure to ensure that we've got a structure that's kind of right-size for where the business is going forward.
Stan, are you committing to, just on that, it wasn't in the numbers necessarily, but you talked about the scale on the SG&A as revenue grows. Is there kind of another cost out program that you're extending or you're hitting through the 2021, 2022 plan that wasn't clear from the presentation?
Yeah. As we're driving an overall 500 basis point improvement, we continue to take out spend. Candidly, we've done that over a period of time. If you looked at last year, we took out over $150 million of gross spend, invested part of that in business. We're going to continue those optimization and efficiency efforts, that cuts across the company. It's not just shared services as we go to look at that, but we think there's opportunity, and we do what you'd expect us to do. We're benchmarking the activities. We're looking at other companies to say, "How are they operating?" Candidly, we're yielding off the investments that we've made in our own systems. Things like, as we invested in an ERP with a new leasing system for North America back a few years ago, we're yielding results on that.
Candidly, that helped us enormously as we went through the leasing accounting change that went into play 1/1, and it's allowed us to operate a lot more efficiently. We're going to see gains off of that. We are going to reduce the spend and our overall shared services and corporate spend. We're going to get more efficient across the board within the units.
Kartik asked a question at the outset, which I think is an important question, what's different? I'd point to the business platform in particular. I mean, we spent a lot of time, 2013 to 2016, investing in that business platform. We implemented and deployed it in 2016. It was disruptive.
To our business. It's behind us, and now we're yielding the benefits that we said we were going to yield. The $120+ million of benefit a year enabling what we're trying to do in SMB with having devices that are connected to the internet, enabling what we're doing with Commerce Cloud. It's, I think, kind of an instructive data point for the investments we've made, the disruption that we have incurred, and now being on the other side of many of those investments and disruptions.
A couple of questions relating to cash flow. You mentioned that the third-party financing program will have an adverse impact of $50 million-$70 million this year. How should we think about that in 2020, 2021? Also, just wondering, what are your long-term CapEx expectations in total?
Sure. Thanks, Anthony. As we think about the cash flow implication, there's going to be a couple of items as we look there. First, if you think about the $50-$70 that we have in our guidance this year, we want Christopher's business to grow successfully, but we're going to do it in a controlled fashion. We're going to do it with assets that we understand, and we're going to take the appropriate amount of time. While we look at our trajectory, it could go up or down depending on what we see in the market. I think you should look at that level that would accelerate slightly. As we grow into this, you're also going to see after a period of a few years that now that portfolio will start to turn and be able to fulfill part of that.
We'll fund that through various vehicles. We have excess capital today in our bank. Then we would go to market, and that could be in the form of brokered CDs. We have the ability to syndicate. There are numerous options available to manage that. We purposefully haven't drawn a straight line out on this. We want to do this in the right way as we run out and grow that business. Some are free cash flow. That's where we kind of look at from that component. What was your second question?
Just in terms of just overall looking at total CapEx for the next few years.
Sure. I would expect CapEx to grow slightly, but I'd go back to the mix underneath of what we have. That mix changes fairly significantly on a year-to-year basis. We'll have, and I think you should think that it grows maybe just slightly faster than revenue on some years and a little bit lower on other years. You're not going to see dramatic step-ups. When we look at that underneath, we've just done a net five addition in the last year in Lila's business for new additions. I think there's opportunities here to save CapEx as well. Consolidating our Newgistics and Presort facilities saves a fair amount of capital as we look at that. We look at the entire equation, not just the incremental adds, but we're going to look at where we can also save money.
Presort, as we add those sorters and sleevers and other automation, that's not every single year. That's going to ebb and flow. In Jason's business, as we add capital, as we do new product launches, that's a heavy capital year. Candidly, the following years will come down fairly significantly. I think you should think about that kind of ramp on the capital overall.
One last question, we'll conclude and get you guys out to lunch.
Hi, Stan. This is a question for Stan. I guess I just wanted to follow up on the chart on 109, just talking about the debt profile. It sounds like that your intention is to refinance, really sort of keep the gross amount of debt and potentially with the efforts on the Wheeler, potentially that could even grow a little bit depending on the needs there. I guess my question really sort of centers around, if you think about the comment that I've gotten from Adam and other investors is sort of the gross debt as being a sort of a threshold issue for investors. We think about it from the perspective of the rating agencies that maybe, I haven't really dug into it, but it sort of seems like this net gross isn't really resonating.
Do you have any thoughts in just in terms of reducing the gross, even if the net sort of stays the same?
Let me answer that question, Don. If you go back and look at the portfolio evolution that we've had, we've taken opportunities to address that debt load over time as opportunities present themselves. Not just free cash flow, but if we were to divest other areas of the business, we've demonstrated the ability to reduce debt through that vehicle. We've looked at the free cash flow to reduce that debt load. As we refinance over time, that will smooth out some of the debt maturities. On the evolution, if you look in one of the charts, if you remember that revenue chart, the far left-hand wheel had production mail. We divested that business and used the proceeds to pay down debt.
When we did tax reform and we were able to repatriate non-U.S. cash, we used the majority of those proceeds to pay down debt. We'll be opportunistic to look at that, and if there are other areas of the business that aren't consuming that cash, that would be a logical place for us to prioritize to reduce ongoing debt load.
I would just use that question to kind of wrap up. First of all, thank you for your attention this morning and your interest in the story. We obviously have a lot of conviction in what we're doing, and hopefully, that came through this morning. Last year, we talked about the transformation of the company. We also talked about a changing investment thesis and value proposition from a company that was declining for years, that was clearly attractive to a cast of investors, value investors. What we said last year was we were pointing towards an investment thesis that evolved as the company evolved to growth. You saw that last year with the growth in 2018. You certainly, as you contemplate what a growth investor looks like and what they're attracted to, we believe the stock, as Stan pointed out, is certainly at a reasonable price.
I would go on to say that while I generally believe in the efficiency of markets over time, this particular time, I have a hard time rationalizing this particular price point. I wanted to conclude with who it is we're trying to be from a company perspective, because that has very clear implications for the different kinds of investors that think about the company. The story will continue to evolve. We look forward to continuing to have this conversation with you. We've built something that we think has got a lot of legs. Thank you for your time this morning, and we'll look forward to seeing you soon. Thanks, Adam.
Thank you, guys. Appreciate it.